Exam 4: Professional Ethics

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The following situations involve a possible violation of the AICPA's Code of Professional Conduct.For each situation, (1)determine the applicable rule from the Code, (2)decide whether or not the Code has been violated, and (3)briefly explain how the situation violates (or does not violate)the Code.

(Essay)

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Question 81

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?

(Multiple Choice)

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Question 82

Expulsion from the AICPA for failing to follow the rules of conduct is, by itself, sufficient to prevent a CPA from practicing public accounting.

(True/False)

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Question 83

In which of the following circumstances would a CPA be ethically bound to refrain from disclosing any confidential client information?

(Multiple Choice)

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Question 84

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:

(Multiple Choice)

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Question 85

Briefly describe the advantages and disadvantages of a code of conduct based on general statements of ideal conduct as opposed to specific rules that define unacceptable behavior.

(Essay)

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Question 86

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

(True/False)

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Question 87

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?

(Multiple Choice)

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Question 88

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

(Multiple Choice)

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Question 89

A direct financial interest violates independence in which of the following circumstances?

(Multiple Choice)

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Question 90

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

(True/False)

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Question 91

When a member observes the profession's technical and ethical standards and strives to continually improve her competence and quality of services, she is exercising:

(Multiple Choice)

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Question 92

The AICPA Code of Professional Conduct permits the auditor to perform a wide variety of non-audit services for audit clients.

(True/False)

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Question 93

In the AICPA Code of Professional Conduct, the second principle of professional conduct, entitled "The Public Interest," applies only to members of the AICPA in public practice and not to members who work as accountants in business, government, or education.

(True/False)

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Question 94

Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements?

(Multiple Choice)

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Question 95

Under Rule 101, Independence, independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

(True/False)

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Question 96

Which of the following would be considered a violation of the AICPA Code of Conduct?

(Multiple Choice)

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Question 97

The AICPA's Code of Professional Conduct requires independence for all:

(Multiple Choice)

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Question 98

A public company may obtain internal audit services from their financial statement auditor if it is approved by the company's audit committee.

(True/False)

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Question 99

If the board of accountancy in the state in which a CPA firm is licensed has rules that are different than the AICPA's rules, the CPA firm must follow:

(Multiple Choice)

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Question 100

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Exam 4: Professional Ethics

The following situations involve a possible violation of the AICPA's Code of Professional Conduct.For each situation, (1)determine the applicable rule from the Code, (2)decide whether or not the Code has been violated, and (3)briefly explain how the situation violates (or does not violate)the Code.

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?

Expulsion from the AICPA for failing to follow the rules of conduct is, by itself, sufficient to prevent a CPA from practicing public accounting.

In which of the following circumstances would a CPA be ethically bound to refrain from disclosing any confidential client information?

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:

Briefly describe the advantages and disadvantages of a code of conduct based on general statements of ideal conduct as opposed to specific rules that define unacceptable behavior.

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

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?

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

A direct financial interest violates independence in which of the following circumstances?

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

When a member observes the profession's technical and ethical standards and strives to continually improve her competence and quality of services, she is exercising:

The AICPA Code of Professional Conduct permits the auditor to perform a wide variety of non-audit services for audit clients.

In the AICPA Code of Professional Conduct, the second principle of professional conduct, entitled "The Public Interest," applies only to members of the AICPA in public practice and not to members who work as accountants in business, government, or education.

Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements?

Under Rule 101, Independence, independence is considered to be impaired if fees remain unpaid for professional services provided more than six months before the date of the current year's report.

Which of the following would be considered a violation of the AICPA Code of Conduct?

The AICPA's Code of Professional Conduct requires independence for all:

A public company may obtain internal audit services from their financial statement auditor if it is approved by the company's audit committee.

If the board of accountancy in the state in which a CPA firm is licensed has rules that are different than the AICPA's rules, the CPA firm must follow:

The Demand for Audit and Other Assurance Services

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Audit Reports

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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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