Exam 19: Professional Conduct, Independence, and Quality Control

Which of the following statements best describes why the profession of certified public accountants has deemed it essential to promulgate a code of conduct and to establish a mechanism for enforcing observance of the code?

The AICPA Code of Professional Conduct guidance starts at a conceptual level with the principles and progressively moves to general rules and then to detailed interpretation.

When auditing a public company, a CPA must follow the auditing standards and Code of Professional Conduct of the PCAOB.

If an auditor is not independent of the client, it is unlikely that a user of financial statements will place much reliance on the CPA's work.

Which of the following is required for a firm to designate itself as a "Member of the American Institute of Certified Public Accountants" on its letterhead?

Ms. Lembke is a partner for DTS, a CPA firm. She is the lead partner for the firm's largest client, The Grey Elephant. Ms. Zadina, who works in the same office as Ms. Lembke, has a sister who is the controller for The Grey Elephant. Because of potential independence issues, Ms. Zadina does no work for The Grey Elephant. Ms. Zadina is being considered for promotion to partner. What independence issues should Ms. Lembke consider before promoting Ms. Zadina?

Identify the primary purposes of the General Standards Rule, the Compliance with Standards Rule, and the Accounting Principles Rule of the Rules of Conduct.

In which of the following circumstances would a CPA be bound by ethics to refrain from disclosing any confidential information obtained during the course of a professional engagement?

Following the issuance of a PCAOB draft report, how many days does the CPA firm have to respond to accusations?

Principles are stated at a conceptual level, not a detailed level.

A violation of the profession's ethical standards would least likely have occurred when a CPA in public practice:

A CPA's failure to file a tax return is:

A financial interest is "beneficially owned" when an individual or entity is NOT the recorded owner of the interest but has a right to some or all of the underlying benefits of ownership.

A CPA's membership in the AICPA will ordinarily be suspended or revoked automatically for:

Rules of Conduct are enforceable.

Why do professions establish codes of conduct that define ethical behaviors for members of the profession?

Distinguish between the following theories of ethical behavior: a utilitarian approach, a rights-based approach, and a justice-based approach.

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

In auditing a publicly held company, an auditor must follow the professional standards established by all of the following except:

An auditor is about to commence a recurring annual audit engagement. The continuing auditor's independence would ordinarily be considered to be impaired if the prior year's audit fee: