Exam 4: Professional Ethics

Each of the following situations involves a possible violation of the rule on independence.For each situation,(1)decide whether the Code of Professional Conduct has been violated,and (2)briefly explain how the situation violates (or does not violate)the Code of Professional Conduct. a.Harry Brown is a partner in the Topeka office of Hedley & Co.,CPAs.Harry's brother is employed in an audit-sensitive position by Jensen Appliances,a publicly held company in Kansas.Jensen Appliances is one of Hedley & Co.'s audit clients.Neither Harry nor personnel from the Topeka office is involved in the audit of Jensen. Violation? Yes No

Describe the methods used by the AICPA and State Boards of Accountancy to enforce the rules of conduct.

Oehlers,CPA,is a staff auditor participating in the engagement of Capital Trust,Inc.Which of the following circumstances impairs Oehlers' independence?

Which one of the following statements is false?

For which of the following professional services must CPAs be independent?

Under the Form of Organization and Name rule,a CPA firm is prohibited from practicing as a limited liability partnership.

Which part of the AICPA's Code of Professional Conduct is enforceable?

The underlying reason for a code of professional conduct for any profession is

A CPA firm should decline an offer to perform consulting services engagement if

Which of the following is not defined as an act discreditable in either the Rules or the Interpretations of the AICPA's Code of Professional Conduct?

Membership in the AICPA can be terminated without a hearing for

A member in public practice shall neither receive from,nor pay to,a client a commission when the member or member's firm also performs certain services for that client.Are commissions allowed if the CPA performs

Ethics are

It is a violation of the rules of conduct if someone does something on behalf of a member that is a violation if the member does it.

Interpretations of the rules regarding independence allow an auditor to serve as

Julie and Lisa are sisters.Julie is a CPA auditing the company where Lisa works.Julie's independence is impaired if

Members of the AICPA in public practice are prohibited from performing comparative advertising.

Threats to compliance with the AICPA's Code of Professional Conduct fall into seven broad categories.List and explain three of these categories.

The Sarbanes-Oxley Act requires a cooling off period of ________ before a member of an audit team can work for a client in a key management position?

Explain why there is a special need for ethical conduct in the auditing profession.