Question 1

The failure of Lehman Brothers was due in large part to:

Accepted Answer

A) Accelerating recording revenue into an earlier period than warranted 
B) Understating allowance for loan losses 
C) Aggressive valuation of marketable securities 
D) Use of Repo 105 transactions 
A) Accelerating recording revenue into an earlier period than warranted 
B) Understating allowance for loan losses 
C) Aggressive valuation of marketable securities 
D) Use of Repo 105 transactions

Question 2

One reason independence in appearance is used to evaluate threats to independence is:

Accepted Answer

A) Factual independence is based on unobservable matters 
B) Independence in appearance links to other rules of conduct 
C) Threats to independence can only be measured using a safeguards approach 
D) Threats to independence always exist when perceptions indicate a conflict of interests may exist between the auditor and client 
A) Factual independence is based on unobservable matters 
B) Independence in appearance links to other rules of conduct 
C) Threats to independence can only be measured using a safeguards approach 
D) Threats to independence always exist when perceptions indicate a conflict of interests may exist between the auditor and client

Question 3

Which of the following is NOT a component of the KPMG Professional Judgment Framework?

Accepted Answer

A) Clarify issues and conclusions 
B) Clarify issues and objectives 
C) Gather and evaluate information 
D) Articulate and document rationale 
A) Clarify issues and conclusions 
B) Clarify issues and objectives 
C) Gather and evaluate information 
D) Articulate and document rationale

Question 4

Professional skepticism links to professional judgment through the ethical standards of:

Accepted Answer

A) Independent thought,objectivity,and intelligence 
B) Objectivity,intelligence,and reflective thought 
C) Independent thought,objectivity,and due care 
D) Honesty,integrity,and due care 
A) Independent thought,objectivity,and intelligence 
B) Objectivity,intelligence,and reflective thought 
C) Independent thought,objectivity,and due care 
D) Honesty,integrity,and due care

Question 5

The principle of ethical behavior in the AICPA Code that asks questions directly related to ethical courage is:

Accepted Answer

A) Independence 
B) Objectivity 
C) Integrity 
D) Due care 
A) Independence 
B) Objectivity 
C) Integrity 
D) Due care

Question 6

Which of the following is NOT a common judgment tendency?

Accepted Answer

A) Availability tendency 
B) Confirmation tendency 
C) Over-confidence tendency 
D) Decision making tendency 
A) Availability tendency 
B) Confirmation tendency 
C) Over-confidence tendency 
D) Decision making tendency

Question 7

An example of a self-review threat for CPAs in business is:

Accepted Answer

A) Serving as both the CFO of a company and member of its audit committee 
B) Owning stock in the company the CPA works for 
C) Internal auditor accepts work she previously performed in a different position 
D) Serving as both the CFO of a company and member of the board of directors 
A) Serving as both the CFO of a company and member of its audit committee 
B) Owning stock in the company the CPA works for 
C) Internal auditor accepts work she previously performed in a different position 
D) Serving as both the CFO of a company and member of the board of directors

Question 8

Madison is in the process of gathering evidence to support the audit opinion on Jefferson & Adams,Inc.She's a new staff accountant and wants to make sure she exercises the appropriate level of professional skepticism.Madison asks for your advice as the senior on the audit.How best might you guide her as to the skepticism issues?

Accepted Answer

A) Accept management's representation unless they fail to provide adequate supporting documentation 
B) Always review the evidence you gather to assess persuasiveness 
C) Approach the audit assuming fraud does exist 
D) Keep an open mind and rely on your team in making professional judgments 
A) Accept management's representation unless they fail to provide adequate supporting documentation 
B) Always review the evidence you gather to assess persuasiveness 
C) Approach the audit assuming fraud does exist 
D) Keep an open mind and rely on your team in making professional judgments

Question 9

The main issue in the Valley View Hospital case is:

Accepted Answer

A) Fraudulent financial statements 
B) Improper inventory valuation 
C) Medicare fraud 
D) Bribery of foreign officials 
A) Fraudulent financial statements 
B) Improper inventory valuation 
C) Medicare fraud 
D) Bribery of foreign officials

Question 10

Diane is a CFO at We Do What We Want,Inc.She was just instructed by her boss,the CEO,to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections.In order to meet the ethical standards of the accounting profession,Diane must be certain that she:

Accepted Answer

A) Blows the whistle on the financial wrongdoing 
B) Reports the matter to the SEC 
C) Informs the external auditors 
D) Works through the chain of command within the company to avoid subordinating judgment 
A) Blows the whistle on the financial wrongdoing 
B) Reports the matter to the SEC 
C) Informs the external auditors 
D) Works through the chain of command within the company to avoid subordinating judgment

Question 11

Which statement is correct with respect to a CPA's ethical obligation to return client books and records and CPA work papers?

Accepted Answer

A) Client-provided records in the custody or control of the CPA should be returned to the client at the client's request 
B) CPA work papers should be given to the client at the end of each audit 
C) CPA work product never has to be turned over to the client 
D) Client-provided records should be destroyed after the audit 
A) Client-provided records in the custody or control of the CPA should be returned to the client at the client's request 
B) CPA work papers should be given to the client at the end of each audit 
C) CPA work product never has to be turned over to the client 
D) Client-provided records should be destroyed after the audit

Question 12

The Family Games case deals with the following accounting issue:

Accepted Answer

A) Whether an audit firm should inform one audit client about fraudulent financial statements of another client 
B) Whether certain expenditures should be capitalized rather than expensed 
C) Whether revenue should be accelerated into an earlier period 
D) Whether depreciation should be reduced by 20 percent to increase earnings 
A) Whether an audit firm should inform one audit client about fraudulent financial statements of another client 
B) Whether certain expenditures should be capitalized rather than expensed 
C) Whether revenue should be accelerated into an earlier period 
D) Whether depreciation should be reduced by 20 percent to increase earnings

Question 13

The conceptual framework in the AICPA Code establishes a:

Accepted Answer

A) Threats and safeguards approach to assess whether ethics rules have been violated 
B) Rules to assess independence violations apart from those affecting other services 
C) New rule on when to follow the Dodd-Frank whistle-blower's act 
D) Legal liability of auditors 
A) Threats and safeguards approach to assess whether ethics rules have been violated 
B) Rules to assess independence violations apart from those affecting other services 
C) New rule on when to follow the Dodd-Frank whistle-blower's act 
D) Legal liability of auditors

Question 14

The insider trading case against Thomas Flanagan focused on:

Accepted Answer

A) Providing confidential information about audit clients to a friend 
B) Personally trading in securities of audit clients after receiving confidential information 
C) Providing confidential information about audit clients to his business partner 
D) Accepting a position with an audit client after receiving positive confidential information 
A) Providing confidential information about audit clients to a friend 
B) Personally trading in securities of audit clients after receiving confidential information 
C) Providing confidential information about audit clients to his business partner 
D) Accepting a position with an audit client after receiving positive confidential information

Question 15

The International Federation of Accountants (IFAC) research report,Rebuilding Public Confidence in Financial Reporting: An International Perspective,has as its goal which of the following?

Accepted Answer

A) Creating an international CPA certificate. 
B) Examine ways of restoring the credibility of financial reporting and corporate disclosure from an international.perspective. 
C) Establishing a global code of conduct corporate disclosure from an international perspective. 
D) Develop guidelines for auditors to express professional judgment. 
A) Creating an international CPA certificate. 
B) Examine ways of restoring the credibility of financial reporting and corporate disclosure from an international.perspective. 
C) Establishing a global code of conduct corporate disclosure from an international perspective. 
D) Develop guidelines for auditors to express professional judgment.

Question 16

Michael has been approached by the CEO of an audit client and offered two tickets to the FIFA tournament during the Rio 2016 Olympic Games.The CEO knows that Michael's wife is from Rio and thought this was a nice way to thank him for twenty-years of excellent professional services.From an ethical perspective in deciding whether to accept the gift Michael should consider whether:

Accepted Answer

A) He has the time and money to travel to Rio for the games 
B) Threats created by the gifts are at an acceptable level 
C) The audit has been completed for the current year 
D) Nonaudit services are also provided for the client 
A) He has the time and money to travel to Rio for the games 
B) Threats created by the gifts are at an acceptable level 
C) The audit has been completed for the current year 
D) Nonaudit services are also provided for the client

Question 17

What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific provisions and when confidentiality requirements might be waived.

Accepted Answer

The confidentiality of information gaine

Question 18

The due care principle in the AICPA code:

Accepted Answer

A) Addresses the quality of the individual who performs professional services 
B) Addresses the quality of services performed by the CPA 
C) Addresses whether the independence standards have been met 
D) Addresses whether integrity and objectivity have been compromised 
A) Addresses the quality of the individual who performs professional services 
B) Addresses the quality of services performed by the CPA 
C) Addresses whether the independence standards have been met 
D) Addresses whether integrity and objectivity have been compromised

Question 19

The anchoring tendency relates to:

Accepted Answer

A) Starting from an initial numerical value and then adjusting insufficiently away from it in forming a final judgment 
B) Starting from management's estimate and then adjusting sufficiently away from it in forming a final judgment 
C) Developing a system to give voice to one's values 
D) Developing a decision making framework 
A) Starting from an initial numerical value and then adjusting insufficiently away from it in forming a final judgment 
B) Starting from management's estimate and then adjusting sufficiently away from it in forming a final judgment 
C) Developing a system to give voice to one's values 
D) Developing a decision making framework

Question 20

Professional skepticism can best be defined as having:

Accepted Answer

A) An inquiring mind and deliberate decision making 
B) Deliberate decision making and suspension of belief 
C) An inquiring mind and suspension of belief 
D) Careful observation and virtue-based decision making 
A) An inquiring mind and deliberate decision making 
B) Deliberate decision making and suspension of belief 
C) An inquiring mind and suspension of belief 
D) Careful observation and virtue-based decision making

The failure of Lehman Brothers was due in large part to:

One reason independence in appearance is used to evaluate threats to independence is:

Which of the following is NOT a component of the KPMG Professional Judgment Framework?

Professional skepticism links to professional judgment through the ethical standards of:

The principle of ethical behavior in the AICPA Code that asks questions directly related to ethical courage is:

Which of the following is NOT a common judgment tendency?

An example of a self-review threat for CPAs in business is:

The main issue in the Valley View Hospital case is:

Diane is a CFO at We Do What We Want,Inc.She was just instructed by her boss,the CEO,to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections.In order to meet the ethical standards of the accounting profession,Diane must be certain that she:

Which statement is correct with respect to a CPA's ethical obligation to return client books and records and CPA work papers?

The Family Games case deals with the following accounting issue:

The conceptual framework in the AICPA Code establishes a:

The insider trading case against Thomas Flanagan focused on:

The International Federation of Accountants (IFAC) research report,Rebuilding Public Confidence in Financial Reporting: An International Perspective,has as its goal which of the following?

What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific provisions and when confidentiality requirements might be waived.

The due care principle in the AICPA code:

The anchoring tendency relates to:

Professional skepticism can best be defined as having:

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters

Exam 4: Ethics and Professional Judgment in Accounting

The failure of Lehman Brothers was due in large part to:

One reason independence in appearance is used to evaluate threats to independence is:

Which of the following is NOT a component of the KPMG Professional Judgment Framework?

Professional skepticism links to professional judgment through the ethical standards of:

The principle of ethical behavior in the AICPA Code that asks questions directly related to ethical courage is:

Which of the following is NOT a common judgment tendency?

An example of a self-review threat for CPAs in business is:

The main issue in the Valley View Hospital case is:

Diane is a CFO at We Do What We Want,Inc.She was just instructed by her boss,the CEO,to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections.In order to meet the ethical standards of the accounting profession,Diane must be certain that she:

Which statement is correct with respect to a CPA's ethical obligation to return client books and records and CPA work papers?

The Family Games case deals with the following accounting issue:

The conceptual framework in the AICPA Code establishes a:

The insider trading case against Thomas Flanagan focused on:

The International Federation of Accountants (IFAC) research report,Rebuilding Public Confidence in Financial Reporting: An International Perspective,has as its goal which of the following?

What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific provisions and when confidentiality requirements might be waived.

The due care principle in the AICPA code:

The anchoring tendency relates to:

Professional skepticism can best be defined as having:

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters