Question 1

A CPA's failure to file a tax return is

Accepted Answer

A)  considered acceptable by the AICPA Code of Professional Conduct. 
B)  ill-advised because it would impair the CPA's independence with respect to attest clients. 
C)  considered discreditable to the profession. 
D)  a violation of generally accepted auditing standards. 
A)  considered acceptable by the AICPA Code of Professional Conduct. 
B)  ill-advised because it would impair the CPA's independence with respect to attest clients. 
C)  considered discreditable to the profession. 
D)  a violation of generally accepted auditing standards.

Question 2

In which of the following instances would the independence of the CPA not be considered to be impaired? The CPA has been retained as the auditor of a brokerage firm

Accepted Answer

A)  which owes the CPA audit fees for more than one year. 
B)  in which the CPA has a large active margin account. 
C)  in which the CPA's brother is the controller. 
D)  which owes the CPA audit fees for current year services and has just filed a petition for bankruptcy. 
A)  which owes the CPA audit fees for more than one year. 
B)  in which the CPA has a large active margin account. 
C)  in which the CPA's brother is the controller. 
D)  which owes the CPA audit fees for current year services and has just filed a petition for bankruptcy.

Question 3

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

Accepted Answer

A)  was unusually large. 
B)  has not been paid and will not be paid for at least twelve months. 
C)  has not been paid and the client has filed a voluntary petition for bankruptcy. 
D)  was renegotiated during the prior year audit based on the need for expanded testing. 
A)  was unusually large. 
B)  has not been paid and will not be paid for at least twelve months. 
C)  has not been paid and the client has filed a voluntary petition for bankruptcy. 
D)  was renegotiated during the prior year audit based on the need for expanded testing.

Question 4

The SEC has issued independence rules that differ from the AICPA's in all of the following areas except:

Accepted Answer

A)  Working paper documentation. 
B)  Provision of other professional services. 
C)  Human resource and compensation-related issues. 
D)  Required communication. 
A)  Working paper documentation. 
B)  Provision of other professional services. 
C)  Human resource and compensation-related issues. 
D)  Required communication.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Rules of Conduct are enforceable.

Accepted Answer

A) True 
 B)False

Question 7

Interpretations of Rules of Conduct are enforceable.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A violation of the profession's ethical standards would most likely occur when a CPA who

Accepted Answer

A)  is also admitted to the Bar represents on letterhead to be both an attorney and a CPA. 
B)  writes a newsletter on financial management also permits a publishing company to solicit subscriptions by direct mail. 
C)  is controller of a bank permits the bank to use the controller's CPA title in the listing of officers in its publications. 
D)  refused to hire a new employee does so because the CPA deemed the candidate to be "too old." 
A)  is also admitted to the Bar represents on letterhead to be both an attorney and a CPA. 
B)  writes a newsletter on financial management also permits a publishing company to solicit subscriptions by direct mail. 
C)  is controller of a bank permits the bank to use the controller's CPA title in the listing of officers in its publications. 
D)  refused to hire a new employee does so because the CPA deemed the candidate to be "too old."

Question 10

For private companies,accounting firms are prohibited from providing

Accepted Answer

A)  outsourced internal audit services. 
B)  audit services. 
C)  review services. 
D)  none of these. 
A)  outsourced internal audit services. 
B)  audit services. 
C)  review services. 
D)  none of these.

Question 11

Which of the following is not a Principle of Professional Conduct as defined by the Code of Professional Conduct?

Accepted Answer

A)  Integrity. 
B)  Due care. 
C)  Reporting. 
D)  Scope and nature of services. 
A)  Integrity. 
B)  Due care. 
C)  Reporting. 
D)  Scope and nature of services.

Question 12

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?

Accepted Answer

A)  Ethical standards are established so that users of accounting services know what to expect, the professionals know what behaviors are acceptable, and overseers can take disciplinary action when appropriate. 
B)  A prerequisite to success is the establishment of an ethical code that stresses primarily the professional's responsibility to clients and colleagues. 
C)  A requirement of most state laws calls for the profession to establish a code of conduct. 
D)  An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession. 
A)  Ethical standards are established so that users of accounting services know what to expect, the professionals know what behaviors are acceptable, and overseers can take disciplinary action when appropriate. 
B)  A prerequisite to success is the establishment of an ethical code that stresses primarily the professional's responsibility to clients and colleagues. 
C)  A requirement of most state laws calls for the profession to establish a code of conduct. 
D)  An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession.

Question 13

The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to

Accepted Answer

A)  enable the CPA firm to attest to the reliability of the client. 
B)  satisfy the CPA firm's duty to the public concerning the acceptance of new clients. 
C)  minimize the likelihood of association with clients whose management lacks integrity. 
D)  anticipate before performing any fieldwork whether an unqualified opinion can be expressed. 
A)  enable the CPA firm to attest to the reliability of the client. 
B)  satisfy the CPA firm's duty to the public concerning the acceptance of new clients. 
C)  minimize the likelihood of association with clients whose management lacks integrity. 
D)  anticipate before performing any fieldwork whether an unqualified opinion can be expressed.

Question 14

Which professional and regulatory bodies establish the ethical and professional rules for auditors of: (1)public companies and (2)private companies?

Accepted Answer

(1)The principles,rules,and regulations

Question 15

The Principles of Professional Conduct set forth the minimum standards.

Accepted Answer

A) True 
 B)False

Question 16

According to the ethical standards of the profession,which of the following acts is generally prohibited?

Accepted Answer

A)  Issuing a modified report explaining a failure to follow a governmental regulatory agency's standards when conducting an attest service for a client. 
B)  Revealing confidential client information during a quality review of a professional practice by a team from the state CPA society. 
C)  Accepting a contingent fee for representing a client in an examination of the client's federal tax return by an IRS agent. 
D)  Retaining client records after an engagement is terminated prior to completion and the client has demanded its return. 
A)  Issuing a modified report explaining a failure to follow a governmental regulatory agency's standards when conducting an attest service for a client. 
B)  Revealing confidential client information during a quality review of a professional practice by a team from the state CPA society. 
C)  Accepting a contingent fee for representing a client in an examination of the client's federal tax return by an IRS agent. 
D)  Retaining client records after an engagement is terminated prior to completion and the client has demanded its return.

Question 17

According to the ethical standards of the profession,which of the following acts is generally prohibited?

Accepted Answer

A)  Purchasing a product from a third party and reselling it to a client. 
B)  Writing a financial management newsletter promoted and sold by a publishing company. 
C)  Accepting a commission for recommending a product to an audit client. 
D)  Accepting engagements obtained through the efforts of third parties. 
A)  Purchasing a product from a third party and reselling it to a client. 
B)  Writing a financial management newsletter promoted and sold by a publishing company. 
C)  Accepting a commission for recommending a product to an audit client. 
D)  Accepting engagements obtained through the efforts of third parties.

Question 18

The AICPA Code of Professional Conduct deals mainly with behavior and actions of individual auditors.

Accepted Answer

A) True 
 B)False

Question 19

With respect to ethics,the rights-based approach

Accepted Answer

A)  suggests that auditors should always verify ownership of a client's material tangible assets. 
B)  is primarily concerned with equity and impartiality. 
C)  suggests that an individual's actions should not violate the rights of any individual. 
D)  recognizes that decisions involve trade-offs between costs and benefits. 
A)  suggests that auditors should always verify ownership of a client's material tangible assets. 
B)  is primarily concerned with equity and impartiality. 
C)  suggests that an individual's actions should not violate the rights of any individual. 
D)  recognizes that decisions involve trade-offs between costs and benefits.

Question 20

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

Accepted Answer

Utilitarianism focuses on the consequenc

Exam 19: Professsional Conduct,Independence,and Quality Control

A CPA's failure to file a tax return is

In which of the following instances would the independence of the CPA not be considered to be impaired? The CPA has been retained as the auditor of a brokerage firm

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

The SEC has issued independence rules that differ from the AICPA's in all of the following areas except:

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

Rules of Conduct are enforceable.

Interpretations of Rules of Conduct are enforceable.

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

A violation of the profession's ethical standards would most likely occur when a CPA who

For private companies,accounting firms are prohibited from providing

Which of the following is not a Principle of Professional Conduct as defined by the Code of Professional Conduct?

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 primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to

Which professional and regulatory bodies establish the ethical and professional rules for auditors of: (1)public companies and (2)private companies?

The Principles of Professional Conduct set forth the minimum standards.

According to the ethical standards of the profession,which of the following acts is generally prohibited?

According to the ethical standards of the profession,which of the following acts is generally prohibited?

The AICPA Code of Professional Conduct deals mainly with behavior and actions of individual auditors.

With respect to ethics,the rights-based approach

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

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Legal Liability

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

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