Question 1

According to the profession's ethical standards,a CPA would be considered independent in which of the following instances?

Accepted Answer

A)  A client leases part of an office building from the CPA, resulting in a material indirect financial interest to the CPA. 
B)  The CPA has a material direct financial interest in a client, but transfers the interest into a blind trust. 
C)  The CPA owns an office building and the mortgage on the building is guaranteed by a client. 
D)  The CPA belongs to a country club client in which membership requires an annual fee. 
A)  A client leases part of an office building from the CPA, resulting in a material indirect financial interest to the CPA. 
B)  The CPA has a material direct financial interest in a client, but transfers the interest into a blind trust. 
C)  The CPA owns an office building and the mortgage on the building is guaranteed by a client. 
D)  The CPA belongs to a country club client in which membership requires an annual fee.

Question 2

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?

Accepted Answer

A)  The CPA is issued a summons enforceable by a court order that orders the CPA to present confidential information. 
B)  A major stockholder of a client company seeks accounting information from the CPA after management declined to disclose the requested information. 
C)  Confidential client information is requested as part of a quality review of the CPA's practice by a review team authorized by the AICPA. 
D)  An inquiry by a disciplinary body of a state CPA society requests confidential client information. 
A)  The CPA is issued a summons enforceable by a court order that orders the CPA to present confidential information. 
B)  A major stockholder of a client company seeks accounting information from the CPA after management declined to disclose the requested information. 
C)  Confidential client information is requested as part of a quality review of the CPA's practice by a review team authorized by the AICPA. 
D)  An inquiry by a disciplinary body of a state CPA society requests confidential client information.

Question 3

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?

Accepted Answer

Interpretation of the Independence Rule

Question 4

Match each term below with its definition as provided by the AICPA Rules of Conduct.

Accepted Answer

The answer of Match each term below with its definition...

Question 5

A CPA firm would be reasonably assured of meeting its overall responsibility to provide services that conform with professional standards by

Accepted Answer

A)  adhering to generally accepted accounting principles. 
B)  implementing an appropriate system of quality control. 
C)  joining professional societies that enforce ethical conduct. 
D)  maintaining an attitude of independence in its engagements. 
A)  adhering to generally accepted accounting principles. 
B)  implementing an appropriate system of quality control. 
C)  joining professional societies that enforce ethical conduct. 
D)  maintaining an attitude of independence in its engagements.

Question 6

A CPA's license to practice will ordinarily be suspended or revoked automatically for

Accepted Answer

A)  controlling the bookkeeping for a compilation client. 
B)  conviction of willful failure to file personal income tax return. 
C)  refusing to respond to an inquiry by the AICPA practice review committee. 
D)  accepting compensation while honoring a subpoena to appear as an expert witness. 
A)  controlling the bookkeeping for a compilation client. 
B)  conviction of willful failure to file personal income tax return. 
C)  refusing to respond to an inquiry by the AICPA practice review committee. 
D)  accepting compensation while honoring a subpoena to appear as an expert witness.

Question 7

Professionalism refers to the conduct,aims,or qualities that characterize a given profession.

Accepted Answer

A) True 
 B)False

Question 8

When can a CPA disclose confidential information without the client's consent?

Accepted Answer

A CPA can disclose confidential informat

Question 9

The independence standards issued by the PCAOB do not prohibit the provision of tax services to an attest client.

Accepted Answer

A) True 
 B)False

Question 10

In performing an audit,Jackson,CPA,discovers that the professional competence necessary for the engagement is lacking.Jackson informs management of the situation and recommends another local CPA firm and management engages this other firm.Under these circumstances

Accepted Answer

A)  jackson may request compensation from the other CPA firm for any professional services rendered to it in connection with the engagement. 
B)  jackson may accept a referral fee from the other CPA firm. 
C)  jackson has violated the AICPA Code of Professional Conduct because of non-fulfillment of the duty of performance. 
D)  jackson's lack of competence should be construed to be a violation of generally accepted auditing standards. 
A)  jackson may request compensation from the other CPA firm for any professional services rendered to it in connection with the engagement. 
B)  jackson may accept a referral fee from the other CPA firm. 
C)  jackson has violated the AICPA Code of Professional Conduct because of non-fulfillment of the duty of performance. 
D)  jackson's lack of competence should be construed to be a violation of generally accepted auditing standards.

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

With respect to ethics,the justice-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 13

According to the Code of Professional Conduct,which of the following individuals is not in a position to influence an attest engagement (i.e.,not a covered member)?

Accepted Answer

A)  The office's managing partner (or partner equivalent) who determines the compensation of the attest engagement partner. 
B)  The office's IT expert, who consulted with the engagement partner (or partner equivalent) regarding the client's IT system. 
C)  The partner (or partner equivalent) in another office in a nearby city who regularly plays golf with the engagement partner (or partner equivalent). 
D)  The office's partner (or partner equivalent) who monitors quality control over the attest engagement. 
A)  The office's managing partner (or partner equivalent) who determines the compensation of the attest engagement partner. 
B)  The office's IT expert, who consulted with the engagement partner (or partner equivalent) regarding the client's IT system. 
C)  The partner (or partner equivalent) in another office in a nearby city who regularly plays golf with the engagement partner (or partner equivalent). 
D)  The office's partner (or partner equivalent) who monitors quality control over the attest engagement.

Question 14

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence.What are the three basic principles?

Accepted Answer

The three basic principles are: (1)an au

Question 15

A basic objective of a CPA firm is to provide professional services that conform to professional standards.Reasonable assurance of achieving this basic objective is provided through

Accepted Answer

A)  compliance with generally accepted reporting standards. 
B)  a system of quality control. 
C)  a system of peer review. 
D)  continuing professional education. 
A)  compliance with generally accepted reporting standards. 
B)  a system of quality control. 
C)  a system of peer review. 
D)  continuing professional education.

Question 16

Within the context of quality control,the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide personnel within the firm with

Accepted Answer

A)  technical training that ensures proficiency as an auditor. 
B)  opportunities for career advancement outside the accounting firm. 
C)  knowledge required to fulfill assigned responsibilities. 
D)  knowledge required to perform a peer review. 
A)  technical training that ensures proficiency as an auditor. 
B)  opportunities for career advancement outside the accounting firm. 
C)  knowledge required to fulfill assigned responsibilities. 
D)  knowledge required to perform a peer review.

Question 17

When auditing a public company,which of the following impairs an auditor's independence?

Accepted Answer

A)  Offering audit services as well as preparing the tax return for the same client. 
B)  The auditor's spouse works in the assembly line of an audit client. 
C)  Lack of fee disclosure in the client's annual report. 
D)  The auditor has been a partner on the engagement for ten years. 
A)  Offering audit services as well as preparing the tax return for the same client. 
B)  The auditor's spouse works in the assembly line of an audit client. 
C)  Lack of fee disclosure in the client's annual report. 
D)  The auditor has been a partner on the engagement for ten years.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

These rules are established so that user

Question 20

Which of the following is an element of a CPA firm's quality control system that should be considered in establishing its quality control policies and procedures?

Accepted Answer

A)  Using the audit risk model. 
B)  Using statistical sampling techniques. 
C)  Assigning personnel to engagements. 
D)  Considering audit risk and materiality. 
A)  Using the audit risk model. 
B)  Using statistical sampling techniques. 
C)  Assigning personnel to engagements. 
D)  Considering audit risk and materiality.

According to the profession's ethical standards,a CPA would be considered independent in which of the following instances?

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?

Match each term below with its definition as provided by the AICPA Rules of Conduct.

A CPA firm would be reasonably assured of meeting its overall responsibility to provide services that conform with professional standards by

A CPA's license to practice will ordinarily be suspended or revoked automatically for

Professionalism refers to the conduct,aims,or qualities that characterize a given profession.

When can a CPA disclose confidential information without the client's consent?

The independence standards issued by the PCAOB do not prohibit the provision of tax services to an attest client.

In performing an audit,Jackson,CPA,discovers that the professional competence necessary for the engagement is lacking.Jackson informs management of the situation and recommends another local CPA firm and management engages this other firm.Under these circumstances

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.

With respect to ethics,the justice-based approach

According to the Code of Professional Conduct,which of the following individuals is not in a position to influence an attest engagement (i.e.,not a covered member)?

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence.What are the three basic principles?

A basic objective of a CPA firm is to provide professional services that conform to professional standards.Reasonable assurance of achieving this basic objective is provided through

Within the context of quality control,the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide personnel within the firm with

When auditing a public company,which of the following impairs an auditor's independence?

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

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

Which of the following is an element of a CPA firm's quality control system that should be considered in establishing its quality control policies and procedures?

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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Exam 19: Professsional Conduct,Independence,and Quality Control

According to the profession's ethical standards,a CPA would be considered independent in which of the following instances?

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?

Match each term below with its definition as provided by the AICPA Rules of Conduct.

A CPA firm would be reasonably assured of meeting its overall responsibility to provide services that conform with professional standards by

A CPA's license to practice will ordinarily be suspended or revoked automatically for

Professionalism refers to the conduct,aims,or qualities that characterize a given profession.

When can a CPA disclose confidential information without the client's consent?

The independence standards issued by the PCAOB do not prohibit the provision of tax services to an attest client.

In performing an audit,Jackson,CPA,discovers that the professional competence necessary for the engagement is lacking.Jackson informs management of the situation and recommends another local CPA firm and management engages this other firm.Under these circumstances

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.

With respect to ethics,the justice-based approach

According to the Code of Professional Conduct,which of the following individuals is not in a position to influence an attest engagement (i.e.,not a covered member)?

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence.What are the three basic principles?

A basic objective of a CPA firm is to provide professional services that conform to professional standards.Reasonable assurance of achieving this basic objective is provided through

Within the context of quality control,the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide personnel within the firm with

When auditing a public company,which of the following impairs an auditor's independence?

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

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

Which of the following is an element of a CPA firm's quality control system that should be considered in establishing its quality control policies and procedures?

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

Filters