Exam 4: Professional Ethics

The AICPA's Code of Professional Conduct requires CPAs to maintain the confidentiality of client information. This rule would be violated if a CPA disclosed information without a client's consent as a result of a

Which of the following is an accurate statement?

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

Most people define unethical behavior as conduct that differs from what they believe is appropriate given the circumstances.

Safeguards can always reduce the threat to an acceptable level.

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. a. Howard Cunningham & Co., CPAs, designates its firm as "Members of the American Institute of Certified Public Accountants." All of the partners of the firm are CPAs. However, one of the partners has recently chosen to allow her membership to lapse because of personal reasons. Rule: ________ Violation? Yes No

Which one of the following statements is false?

"Independence" in auditing means

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?

The AICPA recently issued a new interpretation of the Code of Professional Conduct which addresses a number of suggested safeguards in situations where a member faces pressure from a colleague or a superior to report misleading financial results.

The Code of Conduct rule on independence indicates that materiality must be considered when

Under certain circumstances, a CPA firm can offer legal and expert services unrelated to the audit to publicly held audit clients.

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

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.

Interpretations of rules of conduct in the Code of Professional Conduct are not officially enforceable and practitioners need not justify departure from them.

Interpretations of the AICPA's Code of Professional Conduct are dominated by the concept of

Interpretations of the rules of conduct

A staff member in a national CPA firm is not allowed to own stock in a client corporation even if the staff member is not involved in the client corporation's audit engagement under the AICPA's independence rule.

Under the AICPA's Code of Professional Conduct, CPAs are prohibited from offering audit clients a discount for referring a prospective client even if they are disclosed.

The AICPA Code of Conduct includes a conceptual framework approach for the member to evaluate threats to compliance with the Code. List the three steps necessary to evaluate the threats.