Exam 3: Professional Ethics

The AICPA Conceptual Framework for Independence Standards suggests that CPAs evaluate whether a particular threat would lead which type of person to conclude that an unacceptable risk of non-independence exists?

ABC Company is audited by the Phoenix office of Willingham CPAs.Which of the following individuals would be least likely to be considered a "covered member" by the independence standard?

The AICPA's Code of Professional Conduct consists of two parts,Principles and Rules. a.Describe the purpose of each of the two parts. b.Describe the disciplinary action that may be taken against a member who violates the Code. c.Must the Rules be followed by members of the AICPA that are not in public practice? Explain your answer. a.Principles-goal-oriented,positively stated discussion of the profession's responsibilities to the public,clients,and fellow practitioners.Rules--enforceable applications of the principles. b.For violations of the Code a member may be required to take remedial action,such as attending continuing education programs.For more serious violations,the member may be censured,suspended,or expelled. c.The Rules apply to all members of the AICPA,unless the wording of the rule indicates otherwise.

Which of the following statements is correct?

A CPA may receive a commission for recommending a particular computer system to an audit client.

A primary purpose for establishing a code of conduct within a professional organization is to:

An immaterial loan from the CPA to an officer of a client impairs the independence of the CPA.

Which of the following forms of advertising would most likely to be considered to be a violation of Rule 502 of the AICPA Code of Professional Conduct?

In which of the following circumstances would a covered member be considered independent when performing the audit of the financial statements of a new client for the year ended December 31,20X3?

The AICPA allows an auditor to perform which of the following services for an audit client:

A CPA sole practitioner purchased stock in a client corporation and placed it in a trust as an educational fund for the CPA's minor child.The trust securities were not material to the CPA but were material to the child's personal net worth.Would the independence of the CPA be considered to be impaired with respect to the client?

The American Institute of Certified Public Accountants has been the primary source for ethical rules for internal auditors.

Bill Pan,CPA,has posted the general ledger and has maintained the financial records of Zorko Corporation.As a part of his responsibilities he has recorded journal entries and made closing entries.Which of the following best summarize the AICPA and SEC views as to the following question: Is audit independence impaired? Item AICPA SEC A) Yes Yes B) Yes No C) No Yes D) No No

A client company has not paid its 20X3 audit fees.According to the AICPA Code of Professional Conduct,in order for the auditor to be considered independent with respect to the 20X4 audit,the 20X3 audit fees must be paid before the:

The Sarbanes-Oxley Act of 2002 placed significant restrictions on the types of consulting that may be performed by auditors for their public company audit clients. a.List four types of services that are prohibited by the Act. b.List three types of general consulting activities that would impair the auditors' independence based on the AICPA Code of Professional Conduct. a.Services prohibited by the Act include (4 required): · Bookkeeping or other services related to the accounting records or financial statements. · Financial information systems design and implementation. · Appraisal,valuation and actuarial services. · Internal audit outsourcing services,management functions or human resources. · Various investment services. · Legal services and expert services unrelated to auditing. b.Consulting functions that the AICPA Code of Professional Conduct indicate impair independence include (3 required): · Authorizing,executing or consummating a transaction. · Preparing source documents. · Having custody of client assets. · Supervising client employees in their normal recurring activities. · Determining which recommendation should be implemented. · Reporting to the board of directors on behalf of management. · Serving as a client's stock transfer or escrow agent,registrar,or its general counsel.

Which of the following acts by a CPA would be most likely to be a violation of the AICPA Code of Professional Conduct?

In determining the scope and nature of services to be performed in public practice,a CPA firm should:

Which of the following forms of organization is most likely to protect the personal assets of any partner or shareholder who has not been involved on an engagement resulting in litigation?

Financial interests of a CPA's nondependent children are attributed directly to the CPA.

Which of the following is least likely to impair a CPA firm's independence with respect to a nonpublic audit client in the Oklahoma City office of a national CPA firm?