Question 1

The duty of confidentiality applies to:

Accepted Answer

A)  Spoken communications only 
B)  Written documents only, whether or not they are in digital or physical form 
C)  Only written documents that are marked with the word "Confidential" or an equivalent phrase 
D)  All documents, communications, and observed facts 
A)  Spoken communications only 
B)  Written documents only, whether or not they are in digital or physical form 
C)  Only written documents that are marked with the word "Confidential" or an equivalent phrase 
D)  All documents, communications, and observed facts D

Question 2

The AICPA's Code of Professional Conduct recognizes that the duty of confidentiality is:

Accepted Answer

A)  Absolute 
B)  Subject to various exceptions, even without client consent 
C)  Cannot be waived by a client 
D)  Cannot be waived by a client if the public interest is best served by a particular client's information remaining confidential 
A)  Absolute 
B)  Subject to various exceptions, even without client consent 
C)  Cannot be waived by a client 
D)  Cannot be waived by a client if the public interest is best served by a particular client's information remaining confidential B

Question 3

The IRS will:

Accepted Answer

A)  Never release a person's tax return or information contained within it 
B)  Only release a person's tax return in response to a proper request submitted in accordance with the Freedom of Information Act 
C)  Generally not release a person's tax returns except for limited purposes, such as the determination of the employer of a person who has failed to pay child support 
D)  Release a person's tax return, or information contained within it, to a federally chartered bank to whom a taxpayer has applied for a commercial loan 
A)  Never release a person's tax return or information contained within it 
B)  Only release a person's tax return in response to a proper request submitted in accordance with the Freedom of Information Act 
C)  Generally not release a person's tax returns except for limited purposes, such as the determination of the employer of a person who has failed to pay child support 
D)  Release a person's tax return, or information contained within it, to a federally chartered bank to whom a taxpayer has applied for a commercial loan C

Question 4

Before disclosing confidential information,a CPA generally must obtain client consent.This consent must be:

Accepted Answer

A)  Included in the original engagement agreement signed at the outset of an accountant-client relationship 
B)  Included in the original engagement agreement or in a subsequent amendment to that document 
C)  Specific to a particular fact or set of facts 
D)  In writing, but the parties have substantial flexibility in deciding on the form and content of such a consent document 
A)  Included in the original engagement agreement signed at the outset of an accountant-client relationship 
B)  Included in the original engagement agreement or in a subsequent amendment to that document 
C)  Specific to a particular fact or set of facts 
D)  In writing, but the parties have substantial flexibility in deciding on the form and content of such a consent document

Question 5

A car tire manufacturer guarantees that its tires will last for 50,000 miles and,if they do not,it will replace the tires at no cost.A CPA working for this manufacturer of car tires is in charge of determining the liability account entitled "Liability for Warranty Repairs." Historically,this warranty account has had a balance equal to 2% of sales.However,due to a drastically high level of defects at the company's offshore manufacturing facility,this liability account needs to be increased by millions of dollars to roughly equal 9% of sales. To avoid negative publicity,this CPA's employer does not want this revised amount to be disclosed in its financial statements.The employer:

Accepted Answer

A)  Can keep this fact confidential because the CPA knows, or reasonably should know, that it will cause harm to the employer 
B)  Cannot keep this fact confidential because the duty of confidentiality does not apply to the relationship between an employer and an employee 
C)  Cannot keep this fact confidential because the CPA has a primary duty to ensure that a company's financial statements are accurate 
D)  Can keep this fact confidential because the duty of confidentiality does apply to the relationship between an employer and a CPA-employee 
A)  Can keep this fact confidential because the CPA knows, or reasonably should know, that it will cause harm to the employer 
B)  Cannot keep this fact confidential because the duty of confidentiality does not apply to the relationship between an employer and an employee 
C)  Cannot keep this fact confidential because the CPA has a primary duty to ensure that a company's financial statements are accurate 
D)  Can keep this fact confidential because the duty of confidentiality does apply to the relationship between an employer and a CPA-employee

Question 6

During the cold winter months,a Nebraska corn farmer discussed hiring a CPA to maintain his books and records.During the course of their discussions,the farmer told the CPA about various proprietary techniques that he uses to maximize the yield from growing corn and maximize the revenue his business generates.Thereafter,the farmer got busy operating his business and never contacted the CPA again. For what period of time,if any,does this CPA owe a duty of confidentiality to this farmer?

Accepted Answer

A)  No duty at all because the duty of confidentiality only continued until the time at which it became reasonably certain that the farmer would not become the CPA's client 
B)  Expired after the end of the farmer's busy growing and harvesting season, if not sooner 
C)  One year 
D)  Forever 
A)  No duty at all because the duty of confidentiality only continued until the time at which it became reasonably certain that the farmer would not become the CPA's client 
B)  Expired after the end of the farmer's busy growing and harvesting season, if not sooner 
C)  One year 
D)  Forever

Question 7

A CPA wishes to mention the names of her most prominent clients on her website.The mere existence of a professional relationship between a CPA and a small business client:

Accepted Answer

A)  Never may be disclosed due to the duty of confidentiality 
B)  Never may be disclosed unless the client gives it specific consent 
C)  Generally may be disclosed by a CPA as long as the substance of the communications between them is not disclosed 
D)  Always may be disclosed, but it is advisable to first request the client's permission to avoid jeopardizing the client's goodwill 
A)  Never may be disclosed due to the duty of confidentiality 
B)  Never may be disclosed unless the client gives it specific consent 
C)  Generally may be disclosed by a CPA as long as the substance of the communications between them is not disclosed 
D)  Always may be disclosed, but it is advisable to first request the client's permission to avoid jeopardizing the client's goodwill

Question 8

A CPA's client base includes both publicly traded corporations and smaller privately-owned clients.Some of these clients require audits,and others only require bookkeeping and tax compliance services.If the CPA wishes to sell her professional practice to another CPA firm,she may disclose to the prospective buyer information concerning:

Accepted Answer

A)  only the publicly traded clients 
B)  only the clients for whom she issues an audit opinion 
C)  all information requested, as long as she takes reasonable precautions to ensure that the prospective buyer does not disclose sensitive client information shown to it 
D)  none of these clients, due to the duty of confidentiality 
A)  only the publicly traded clients 
B)  only the clients for whom she issues an audit opinion 
C)  all information requested, as long as she takes reasonable precautions to ensure that the prospective buyer does not disclose sensitive client information shown to it 
D)  none of these clients, due to the duty of confidentiality

Question 9

Can the duty of confidentiality be waived or overridden by:
a. Government authorities?
b. The client itself?

Accepted Answer

The duty of confidentiality is a fundame

Question 10

The FBI is trying to locate a suspected terrorist.Law enforcement authorities believe that this terrorist currently holds a job and,therefore,has had payroll taxes withheld from his paycheck.Also,this suspected terrorist would have received a W-2 payroll statement form from his employer that references his last-known address.The FBI has asked the IRS to cooperate by disclosing the name of the employer and the last known address of this suspected terrorist.Can the IRS disclose this information?

Accepted Answer

A)  No, due to the duty of confidentiality 
B)  No, due to the federal taxpayer privilege 
C)  Yes, because the law permits it 
D)  Yes, because an employer does not have any privacy duties to its employees regarding qualitative tax information 
A)  No, due to the duty of confidentiality 
B)  No, due to the federal taxpayer privilege 
C)  Yes, because the law permits it 
D)  Yes, because an employer does not have any privacy duties to its employees regarding qualitative tax information

Question 11

if a paid tax return preparer discloses a client's Social Security Number,the preparer is subject to monetary penalties:

Accepted Answer

A)  Only if the disclosure was intentional 
B)  Only if the disclosure was intentional or reckless 
C)  If the disclosure was intentional, reckless, or inadvertent 
D)  Only if the client can demonstrate that he or she suffered monetary damages 
A)  Only if the disclosure was intentional 
B)  Only if the disclosure was intentional or reckless 
C)  If the disclosure was intentional, reckless, or inadvertent 
D)  Only if the client can demonstrate that he or she suffered monetary damages

Question 12

A key difference between the attorney-client privilege and the accountant- client privilege is that:

Accepted Answer

A)  The accountant-client privilege has been enacted in every state 
B)  The attorney-client privilege is more extensive because it encompasses all documents, observations, and thought processes 
C)  The attorney-client privilege precludes the attorney from releasing information, even in court, but a CPA asserting the accountant-client privilege must release information if requested by a court 
D)  The attorney-client privilege precludes an attorney from releasing information in an administrative hearing or to an administrative authority, but the accountant-client privilege does not 
A)  The accountant-client privilege has been enacted in every state 
B)  The attorney-client privilege is more extensive because it encompasses all documents, observations, and thought processes 
C)  The attorney-client privilege precludes the attorney from releasing information, even in court, but a CPA asserting the accountant-client privilege must release information if requested by a court 
D)  The attorney-client privilege precludes an attorney from releasing information in an administrative hearing or to an administrative authority, but the accountant-client privilege does not

Question 13

A CPA may utilize information obtained during the course of a professional accountant-client relationship for personal gain:

Accepted Answer

A)  Only if the CPA does not disclose this information to others 
B)  Only if the source of this information cannot reasonably be discovered by others 
C)  Only if the use of this information does not preclude the client from pursuing any opportunities that it otherwise would have desired to pursue 
D)  Never 
A)  Only if the CPA does not disclose this information to others 
B)  Only if the source of this information cannot reasonably be discovered by others 
C)  Only if the use of this information does not preclude the client from pursuing any opportunities that it otherwise would have desired to pursue 
D)  Never

Question 14

The duty of confidentiality arises when:

Accepted Answer

A)  A professional accountant and client agree to it in their contract for services 
B)  A professional accountant expressly agrees to abide by the AICPA's Code of Professional Conduct 
C)  Automatically for a professional accountant under the IFAC Code of Conduct, but not under the AICPA's Code of Professional Conduct 
D)  Automatically for a professional accountant, under both the IFAC and AICPA Codes of Conduct 
A)  A professional accountant and client agree to it in their contract for services 
B)  A professional accountant expressly agrees to abide by the AICPA's Code of Professional Conduct 
C)  Automatically for a professional accountant under the IFAC Code of Conduct, but not under the AICPA's Code of Professional Conduct 
D)  Automatically for a professional accountant, under both the IFAC and AICPA Codes of Conduct

Question 15

If a paid tax return preparer intentionally discloses qualitative information,such as a client's address,but does not disclose any financial information appearing on the client's tax return,the tax return preparer:

Accepted Answer

A)  Is potentially subject to monetary penalties and possible imprisonment 
B)  Is potentially subject to monetary penalties but not criminal punishment 
C)  Is subject to a statutory fine of $1,000 per violation unless the preparer can demonstrate good cause 
D)  Not subject to monetary penalties and possible imprisonment because her misconduct involved an accidental mistake 
A)  Is potentially subject to monetary penalties and possible imprisonment 
B)  Is potentially subject to monetary penalties but not criminal punishment 
C)  Is subject to a statutory fine of $1,000 per violation unless the preparer can demonstrate good cause 
D)  Not subject to monetary penalties and possible imprisonment because her misconduct involved an accidental mistake

Question 16

A CPA violates the duty of confidentiality if,without obtaining client consent,she discloses potentially embarrassing client information to:

Accepted Answer

A)  Her CPA firm partner 
B)  A third party service provider who prepares depreciation schedules reflected and incorporated into the client's tax return 
C)  A document delivery company 
D)  A moving company that helps pack and relocate the CPA firm from its former office location to a new location 
A)  Her CPA firm partner 
B)  A third party service provider who prepares depreciation schedules reflected and incorporated into the client's tax return 
C)  A document delivery company 
D)  A moving company that helps pack and relocate the CPA firm from its former office location to a new location

Question 17

The federal accountant-client privilege:

Accepted Answer

A)  Applies only to the provisions of tax advice 
B)  Applies only to the provision of tax advice relating to matters that do not involve fraud or other serious criminal activity 
C)  Applies to all accountants who give advice regarding the preparation or presentation of financial statements, regardless of whether they are CPAs 
D)  Does not exist 
A)  Applies only to the provisions of tax advice 
B)  Applies only to the provision of tax advice relating to matters that do not involve fraud or other serious criminal activity 
C)  Applies to all accountants who give advice regarding the preparation or presentation of financial statements, regardless of whether they are CPAs 
D)  Does not exist

Question 18

A client wants to discuss with its CPA some of the valuation and accounting issues associated with maintaining a proprietary business process as a trade secret rather than obtaining a patent for it.Patents are granted by the United States Patent Office.As a result:

Accepted Answer

A)  The federal accountant-client privilege applies to protect these discussions from being revealed to the general public 
B)  The duty of confidentiality, as articulated in the Code of Professional Conduct, applies to these discussions 
C)  The federal accountant-client privilege does not fully apply because discussions of non-accounting issues, such as the preservation of a patent, are exempted from the scope of this privilege 
D)  Both the duty of confidentiality and the federal accountant-client privilege govern this situation 
A)  The federal accountant-client privilege applies to protect these discussions from being revealed to the general public 
B)  The duty of confidentiality, as articulated in the Code of Professional Conduct, applies to these discussions 
C)  The federal accountant-client privilege does not fully apply because discussions of non-accounting issues, such as the preservation of a patent, are exempted from the scope of this privilege 
D)  Both the duty of confidentiality and the federal accountant-client privilege govern this situation

Question 19

If a CPA provides professional services to a large corporation,it should discuss confidential client information:

Accepted Answer

A)  Only with the corporation's Audit Committee and General Counsel 
B)  Only with the corporation's Audit Committee and Board of Directors 
C)  Only with the corporation's General Counsel to preserve the attorney-client privilege concerning such communications 
D)  With any corporate employee who, in the CPA's professional judgment, is an appropriate recipient of such information 
A)  Only with the corporation's Audit Committee and General Counsel 
B)  Only with the corporation's Audit Committee and Board of Directors 
C)  Only with the corporation's General Counsel to preserve the attorney-client privilege concerning such communications 
D)  With any corporate employee who, in the CPA's professional judgment, is an appropriate recipient of such information

Question 20

Due to its international expansion,a privately-held company ended its relationship with its local CPA firm and retained a larger,multi-office CPA firm.The newly-retained CPA firm has asked the former CPA firm to "forward all client records,financial statements,and workpapers still in its possession." The former CPA firm,however,has refused to do so.The former CPA firm:

Accepted Answer

A)  Definitely is not in violation of the AICPA's Code of Professional Conduct 
B)  Is in violation of professional standards if all outstanding fees owed to it have been paid by its client 
C)  Is in violation of professional standards if the newly-retained CPA firm has offered to pay all reasonable costs associated with the transmission of documents 
D)  Is in violation of professional standards if the newly-retained CPA firm has, in good faith, communicated that receipt of these records is urgent due to a time-sensitive governmental filing that is overdue 
A)  Definitely is not in violation of the AICPA's Code of Professional Conduct 
B)  Is in violation of professional standards if all outstanding fees owed to it have been paid by its client 
C)  Is in violation of professional standards if the newly-retained CPA firm has offered to pay all reasonable costs associated with the transmission of documents 
D)  Is in violation of professional standards if the newly-retained CPA firm has, in good faith, communicated that receipt of these records is urgent due to a time-sensitive governmental filing that is overdue

The duty of confidentiality applies to:

The AICPA's Code of Professional Conduct recognizes that the duty of confidentiality is:

The IRS will:

Before disclosing confidential information,a CPA generally must obtain client consent.This consent must be:

A CPA wishes to mention the names of her most prominent clients on her website.The mere existence of a professional relationship between a CPA and a small business client:

Can the duty of confidentiality be waived or overridden by: a. Government authorities? b. The client itself?

if a paid tax return preparer discloses a client's Social Security Number,the preparer is subject to monetary penalties:

A key difference between the attorney-client privilege and the accountant- client privilege is that:

A CPA may utilize information obtained during the course of a professional accountant-client relationship for personal gain:

The duty of confidentiality arises when:

If a paid tax return preparer intentionally discloses qualitative information,such as a client's address,but does not disclose any financial information appearing on the client's tax return,the tax return preparer:

A CPA violates the duty of confidentiality if,without obtaining client consent,she discloses potentially embarrassing client information to:

The federal accountant-client privilege:

A client wants to discuss with its CPA some of the valuation and accounting issues associated with maintaining a proprietary business process as a trade secret rather than obtaining a patent for it.Patents are granted by the United States Patent Office.As a result:

If a CPA provides professional services to a large corporation,it should discuss confidential client information:

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue,justice,and Social Responsibility

Why We Cheat

Greed,corruption,and Collusion

Fraud and Earnings Management

Discreditable Acts: Discrimination,deceit,and Disclosure

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Tax Professionals

Duties of Fiduciaries: Financial Planners,trustees,and Executors

Duties in the Accounting Workplace Online Only

Filters

Exam 9: Confidentiality

The duty of confidentiality applies to:

The AICPA's Code of Professional Conduct recognizes that the duty of confidentiality is:

The IRS will:

Before disclosing confidential information,a CPA generally must obtain client consent.This consent must be:

A CPA wishes to mention the names of her most prominent clients on her website.The mere existence of a professional relationship between a CPA and a small business client:

Can the duty of confidentiality be waived or overridden by: a. Government authorities? b. The client itself?

if a paid tax return preparer discloses a client's Social Security Number,the preparer is subject to monetary penalties:

A key difference between the attorney-client privilege and the accountant- client privilege is that:

A CPA may utilize information obtained during the course of a professional accountant-client relationship for personal gain:

The duty of confidentiality arises when:

If a paid tax return preparer intentionally discloses qualitative information,such as a client's address,but does not disclose any financial information appearing on the client's tax return,the tax return preparer:

A CPA violates the duty of confidentiality if,without obtaining client consent,she discloses potentially embarrassing client information to:

The federal accountant-client privilege:

A client wants to discuss with its CPA some of the valuation and accounting issues associated with maintaining a proprietary business process as a trade secret rather than obtaining a patent for it.Patents are granted by the United States Patent Office.As a result:

If a CPA provides professional services to a large corporation,it should discuss confidential client information:

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue,justice,and Social Responsibility

Why We Cheat

Greed,corruption,and Collusion

Fraud and Earnings Management

Discreditable Acts: Discrimination,deceit,and Disclosure

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Tax Professionals

Duties of Fiduciaries: Financial Planners,trustees,and Executors

Duties in the Accounting Workplace Online Only

Filters