Question 1

Independence is required of a CPA when performing

Accepted Answer

A) management advisory services. 
B) all attestation services. 
C) all attestation and tax services. 
D) all professional services. 
A) management advisory services. 
B) all attestation services. 
C) all attestation and tax services. 
D) all professional services.

Question 2

An auditor's independence is considered impaired if the auditor has

Accepted Answer

A) an immaterial,indirect financial interest in a client. 
B) an outstanding $8,000 balance on a credit card issued by a client. 
C) an automobile loan from a client bank,collateralized by the automobile. 
D) a joint,closely held business investment with the client that is material to the auditor's net worth. 
A) an immaterial,indirect financial interest in a client. 
B) an outstanding $8,000 balance on a credit card issued by a client. 
C) an automobile loan from a client bank,collateralized by the automobile. 
D) a joint,closely held business investment with the client that is material to the auditor's net worth.

Question 3

The Sarbanes-Oxley Act ________ a CPA firm from doing both bookkeeping and auditing services for the same public company client.

Accepted Answer

A) encourages 
B) prohibits 
C) allows 
D) allows on a case-by-case basis 
A) encourages 
B) prohibits 
C) allows 
D) allows on a case-by-case basis

Question 4

The Code of Professional Conduct is established by the membership of the AICPA,and the Interpretations of the Rules of Conduct are prepared by the

Accepted Answer

A) Financial Accounting Standards Board. 
B) Securities and Exchange Commission. 
C) CPA licensing agencies within each state. 
D) Professional Ethics Executive Committee of the AICPA. 
A) Financial Accounting Standards Board. 
B) Securities and Exchange Commission. 
C) CPA licensing agencies within each state. 
D) Professional Ethics Executive Committee of the AICPA.

Question 5

Information obtained by a CPA from a client is legally privileged in federal court.

Accepted Answer

A) True 
 B)False

Question 6

"Independence" in auditing means

Accepted Answer

A) maintaining an indirect financial interest. 
B) not being financially dependent on a client. 
C) taking an unbiased viewpoint. 
D) being an advocate for a client. 
A) maintaining an indirect financial interest. 
B) not being financially dependent on a client. 
C) taking an unbiased viewpoint. 
D) being an advocate for a client.

Question 7

Which of the following is a prescribed set of moral principles or values?

Accepted Answer

A) codes of business ethics for professional groups 
B) laws and regulations 
C) codes of conduct within an organization 
D) all of the above 
A) codes of business ethics for professional groups 
B) laws and regulations 
C) codes of conduct within an organization 
D) all of the above

Question 8

The AICPA's Code of Professional Conduct states that a CPA should maintain integrity and objectivity.The term "objectivity" in the Code refers to a CPA's ability to

Accepted Answer

A) choose independently between alternate accounting principles and auditing standards. 
B) distinguish between accounting practices that are acceptable and those that are not. 
C) be unyielding in all matters dealing with auditing procedures. 
D) maintain an impartial attitude on matters that come under the CPA's review. 
A) choose independently between alternate accounting principles and auditing standards. 
B) distinguish between accounting practices that are acceptable and those that are not. 
C) be unyielding in all matters dealing with auditing procedures. 
D) maintain an impartial attitude on matters that come under the CPA's review.

Question 9

Which of the following represents all of the ways a CPA firm can be organized?

Accepted Answer

A) proprietorships and partnerships 
B) proprietorships,partnerships,and professional corporations 
C) proprietorships,general partnerships,general corporations,professional corporations,limited liability companies,and limited liability partnerships if permitted by state law 
D) single proprietorships,partnerships,professional corporations if permitted by state law,or regular corporations 
A) proprietorships and partnerships 
B) proprietorships,partnerships,and professional corporations 
C) proprietorships,general partnerships,general corporations,professional corporations,limited liability companies,and limited liability partnerships if permitted by state law 
D) single proprietorships,partnerships,professional corporations if permitted by state law,or regular corporations

Question 10

Which of the following is(are)True concerning the Ethical Principles of the Code of Professional Conduct?
I. They identify ideal conduct.
II. They are general ideals and are not enforceable.

Accepted Answer

A) I only 
B) II only 
C) I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) I and II 
D) Neither I nor II

Question 11

Freedom from ________ means the absence of relationships that might interfere with objectivity or integrity.

Accepted Answer

A) independence 
B) acts discreditable 
C) impartiality 
D) conflicts of interest 
A) independence 
B) acts discreditable 
C) impartiality 
D) conflicts of interest

Question 12

Which of the following services is not prohibited by the SEC whenever a CPA also audits the company?

Accepted Answer

A) actuarial services 
B) assisting the company in preparing certain SEC registration statements (e.g.,10-Q,10-K) 
C) investment banker services 
D) bookkeeping services 
A) actuarial services 
B) assisting the company in preparing certain SEC registration statements (e.g.,10-Q,10-K) 
C) investment banker services 
D) bookkeeping services

Question 13

A CPA's financial interests in nonclients may have an effect on independence if the nonclients are investors in or investees of the client.Which situation would not impair a CPA's independence?

Accepted Answer

A) The client has an immaterial investment in a nonclient investee in which the CPA has an immaterial investment. 
B) The CPA has a material indirect financial interest in a nonclient in which the client has a material investment. 
C) The client investor has a nonmaterial investment in the nonclient investee in which the CPA has a material investment. 
D) The CPA has a joint closely held investment with the client in a nonclient that is material to the client as well as the CPA. 
A) The client has an immaterial investment in a nonclient investee in which the CPA has an immaterial investment. 
B) The CPA has a material indirect financial interest in a nonclient in which the client has a material investment. 
C) The client investor has a nonmaterial investment in the nonclient investee in which the CPA has a material investment. 
D) The CPA has a joint closely held investment with the client in a nonclient that is material to the client as well as the CPA.

Question 14

Due to a shortage of personnel,the client asks a member firm to assist with the authorization of accounting transactions.This is an example of which type of threat to compliance with the rules under the AICPA Code of Professional Conduct?

Accepted Answer

A) management participation 
B) self-interest 
C) self-review 
D) undue influence 
A) management participation 
B) self-interest 
C) self-review 
D) undue influence

Question 15

Under the Form of Organization and Name rule,a CPA firm may not designate itself as "Members of the American Institute of Certified Public Accountants" unless a majority of its owners are members of the Institute.

Accepted Answer

A) True 
 B)False

Question 16

Under the AICPA independence rules,the auditor

Accepted Answer

A) is prohibited from performing a company's audit and installing and designing the client's new information system. 
B) does not need to document the understanding and willingness of the client to perform all management functions associated with the nonaudit service. 
C) is prohibited from doing any bookkeeping services for the client if performing the audit. 
D) must follow the more restrictive SEC independence rules when dealing with a public company. 
A) is prohibited from performing a company's audit and installing and designing the client's new information system. 
B) does not need to document the understanding and willingness of the client to perform all management functions associated with the nonaudit service. 
C) is prohibited from doing any bookkeeping services for the client if performing the audit. 
D) must follow the more restrictive SEC independence rules when dealing with a public company.

Question 17

When determining whether independence is impaired because of an ownership interest in a client company,materiality will affect ownership

Accepted Answer

A) in all circumstances. 
B) only for direct ownership. 
C) only for indirect ownership. 
D) under no circumstances. 
A) in all circumstances. 
B) only for direct ownership. 
C) only for indirect ownership. 
D) under no circumstances.

Question 18

All owners of a CPA firm must be CPAs who are qualified to practice.

Accepted Answer

A) True 
 B)False

Question 19

A CPA firm may use any name as long as it is not misleading.

Accepted Answer

A) True 
 B)False

Question 20

________ means that a person acts according to conscience,regardless of the situation.

Accepted Answer

A) Caring 
B) Fairness 
C) Integrity 
D) Respect 
A) Caring 
B) Fairness 
C) Integrity 
D) Respect

Exam 4: Professional Ethics

Independence is required of a CPA when performing

An auditor's independence is considered impaired if the auditor has

The Sarbanes-Oxley Act ________ a CPA firm from doing both bookkeeping and auditing services for the same public company client.

The Code of Professional Conduct is established by the membership of the AICPA,and the Interpretations of the Rules of Conduct are prepared by the

Information obtained by a CPA from a client is legally privileged in federal court.

"Independence" in auditing means

Which of the following is a prescribed set of moral principles or values?

The AICPA's Code of Professional Conduct states that a CPA should maintain integrity and objectivity.The term "objectivity" in the Code refers to a CPA's ability to

Which of the following represents all of the ways a CPA firm can be organized?

Which of the following is(are)True concerning the Ethical Principles of the Code of Professional Conduct? I. They identify ideal conduct. II. They are general ideals and are not enforceable.

Freedom from ________ means the absence of relationships that might interfere with objectivity or integrity.

Which of the following services is not prohibited by the SEC whenever a CPA also audits the company?

A CPA's financial interests in nonclients may have an effect on independence if the nonclients are investors in or investees of the client.Which situation would not impair a CPA's independence?

Due to a shortage of personnel,the client asks a member firm to assist with the authorization of accounting transactions.This is an example of which type of threat to compliance with the rules under the AICPA Code of Professional Conduct?

Under the Form of Organization and Name rule,a CPA firm may not designate itself as "Members of the American Institute of Certified Public Accountants" unless a majority of its owners are members of the Institute.

Under the AICPA independence rules,the auditor

When determining whether independence is impaired because of an ownership interest in a client company,materiality will affect ownership

All owners of a CPA firm must be CPAs who are qualified to practice.

A CPA firm may use any name as long as it is not misleading.

________ means that a person acts according to conscience,regardless of the situation.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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