Question 1

Which of the following statements is FALSE when a public accountant (PA) has an investment in a non-client investor?

Accepted Answer

A)  This investment may be a direct or material indirect financial interest that will diminish independence with respect to a client investee. 
B)  Independence is not impaired, as long as the PA does not have significant influence over the actions or financial statements of the non-client investor. 
C)  Independence is impaired when the PA's investment gives him or her significant influence over the actions of the non-client investor, which might in turn influence the client investee. 
D)  The independence of the PA is always impaired when a PA has an investment in a non-client investor because it puts him or her in a position similar to that of a member of management of the client investee. 
A)  This investment may be a direct or material indirect financial interest that will diminish independence with respect to a client investee. 
B)  Independence is not impaired, as long as the PA does not have significant influence over the actions or financial statements of the non-client investor. 
C)  Independence is impaired when the PA's investment gives him or her significant influence over the actions of the non-client investor, which might in turn influence the client investee. 
D)  The independence of the PA is always impaired when a PA has an investment in a non-client investor because it puts him or her in a position similar to that of a member of management of the client investee. D

Question 2

If a discipline committee requires a member to take continuing professional education, and the member fails to complete it in the required time, what is the likely further penalty?

Accepted Answer

A)  More continuing education courses will be assigned. 
B)  The member will be fined or suspended from the institute. 
C)  The member will be expelled from the institute as a second offender. 
D)  The member will have to complete a period of supervised practice. 
A)  More continuing education courses will be assigned. 
B)  The member will be fined or suspended from the institute. 
C)  The member will be expelled from the institute as a second offender. 
D)  The member will have to complete a period of supervised practice. C

Question 3

What are the sanctions that can be imposed by CPA Ontario if a member is found guilty of violating one of the rules of professional conduct?

Accepted Answer

Sanctions include:
> reprimand
> imposition of fines and/or costs
> suspension
> being struck from the register of students
> expulsion
> being required to complete professional development courses
> supervision in practice
> other disciplinary actions at the discretion of the committee
> publication of the decision and the member/student's name

Question 4

Which of the following statements regarding confidentiality principles is FALSE?

Accepted Answer

A)  The general principle of confidentiality is that a public accountant (P
A)  must not disclose any confidential information without the specific consent of the client. 
B)  These principles allow a PA to ignore the obligation to comply with a validly issued subpoena or summons. 
C)  Members of any professional association involved with professional practice reviews may not disclose any confidential client information that comes to their attention in carrying out those reviews, but neither should it restrict any exchange of information that is necessary for the review. 
D)  Confidential information is information that should not be disclosed to outside parties unless demanded by a court or an administrative body with the power to do so. 
A)  The general principle of confidentiality is that a public accountant (P
A)  must not disclose any confidential information without the specific consent of the client. 
B)  These principles allow a PA to ignore the obligation to comply with a validly issued subpoena or summons. 
C)  Members of any professional association involved with professional practice reviews may not disclose any confidential client information that comes to their attention in carrying out those reviews, but neither should it restrict any exchange of information that is necessary for the review. 
D)  Confidential information is information that should not be disclosed to outside parties unless demanded by a court or an administrative body with the power to do so.

Question 5

Which of the following statement regarding advertising is FALSE?

Accepted Answer

A)  Advertising consists of messages designed to attract business and are broadcast widely (e.g., through print, radio, television, billboards, and pop-up ads on various websites) to an undifferentiated audience. 
B)  The advertising guidelines basically prohibit false, misleading, and deceptive messages. 
C)  Firms commonly obtain new clients through advertising. 
D)  Overall, except for some isolated examples of creative advertising by some firms, the profession has not pursued advertising aggressively. 
A)  Advertising consists of messages designed to attract business and are broadcast widely (e.g., through print, radio, television, billboards, and pop-up ads on various websites) to an undifferentiated audience. 
B)  The advertising guidelines basically prohibit false, misleading, and deceptive messages. 
C)  Firms commonly obtain new clients through advertising. 
D)  Overall, except for some isolated examples of creative advertising by some firms, the profession has not pursued advertising aggressively.

Question 6

A public accountant (PA) in a large firm has been asked to take over the audit of a client in the pharmaceutical industry from another PA who quit abruptly. The PA is unfamiliar with the pharmaceutical industry. The PA should trust that the work was properly planned by the previous PA and should follow that plan carefully.

Accepted Answer

A) True 
 B)False

Question 7

In which of the following circumstances would a CPA be in violation of the "Rules of Professional Conduct" in quoting a fee to a client?

Accepted Answer

A)  A fee fixed by a court. 
B)  A fee based on the approval of a bank loan. 
C)  A fee based on the time estimated to complete the engagement plus out-of-pocket expenses. 
D)  A fee based on the complexity of the engagement. 
A)  A fee fixed by a court. 
B)  A fee based on the approval of a bank loan. 
C)  A fee based on the time estimated to complete the engagement plus out-of-pocket expenses. 
D)  A fee based on the complexity of the engagement.

Question 8

Which of the following statements regarding communications between predecessor and successor auditors is FALSE?

Accepted Answer

A)  Successor auditors are required to make certain inquiries of predecessor auditors when a new client is obtained. 
B)  The successor auditor should ask the new client to notify the predecessor auditor of the proposed change. 
C)  The successor auditor should then ask the predecessor "whether there are any circumstances that should be taken in account which might influence the potential successors' decision whether to accept the appointment." 
D)  When enquiries are made, the successor auditor does not need the client's permission for the predecessor auditor to disclose confidential information. 
A)  Successor auditors are required to make certain inquiries of predecessor auditors when a new client is obtained. 
B)  The successor auditor should ask the new client to notify the predecessor auditor of the proposed change. 
C)  The successor auditor should then ask the predecessor "whether there are any circumstances that should be taken in account which might influence the potential successors' decision whether to accept the appointment." 
D)  When enquiries are made, the successor auditor does not need the client's permission for the predecessor auditor to disclose confidential information.

Question 9

How are competence and due care best described?

Accepted Answer

A)  Competence and due care both refer to public accountants (PAs) doing their best for their clients. 
B)  Competence refers to technical ability; due care refers to strictly following official pronouncements of accounting principles. 
C)  Competence is knowing what do; due care is doing it to the best of one's abilities. 
D)  Competence and due care both refer to ongoing technical training. 
A)  Competence and due care both refer to public accountants (PAs) doing their best for their clients. 
B)  Competence refers to technical ability; due care refers to strictly following official pronouncements of accounting principles. 
C)  Competence is knowing what do; due care is doing it to the best of one's abilities. 
D)  Competence and due care both refer to ongoing technical training.

Question 10

Whenever there is a conflict-of-interest situation for the auditor, there is a potential to create a threat to the auditor's independent state of mind.

Accepted Answer

A) True 
 B)False

Question 11

Independence is not impaired if a public accountant (PA) serves on an organization's board of directors.

Accepted Answer

A) True 
 B)False

Question 12

The duty of confidentiality requires a public accountant (PA) to do which of the following?

Accepted Answer

A)  Not disclose client information under any circumstances. 
B)  Not disclose client information if it is deemed to be confidential. 
C)  Not disclose client information unless required to do so by a validly issued subpoena or summons. 
D)  Not disclose evidence of illegal acts to the relevant authorities. 
A)  Not disclose client information under any circumstances. 
B)  Not disclose client information if it is deemed to be confidential. 
C)  Not disclose client information unless required to do so by a validly issued subpoena or summons. 
D)  Not disclose evidence of illegal acts to the relevant authorities.

Question 13

Discuss self-regulation discipline and public regulation discipline.

Accepted Answer

Self-regulation discipline: Accounting f

Question 14

Describe how actual or threatened litigation affects auditor independence.

Accepted Answer

When a public accountant (PA) and a clie

Question 15

The interpretations related to the rules governing objectivity or independence allow ________.

Accepted Answer

A)  a public accountant (P
A)  to hold a material indirect interest in a client 
B)  a PA to finance a home mortgage with a client if the mortgage is made under the client's normal lending procedures and terms 
C)  a PA's spouse to hold a position as a director of a client's organization 
D)  a PA to serve as a trustee of the pension fund of a client 
A)  a public accountant (P
A)  to hold a material indirect interest in a client 
B)  a PA to finance a home mortgage with a client if the mortgage is made under the client's normal lending procedures and terms 
C)  a PA's spouse to hold a position as a director of a client's organization 
D)  a PA to serve as a trustee of the pension fund of a client

Question 16

When a public accountant (PA) and a client move into an adversary relationship and away from the cooperative one needed in an assurance engagement, independence is threatened by appearances of the PA trying to serve his or her own best interests.

Accepted Answer

A) True 
 B)False

Question 17

In which of the following situations would a public accountant (PA) still be considered independent?

Accepted Answer

A)  The PA received a set of professional-quality, graphite golf clubs from a client as an expression of appreciation for the quality of the work performed. 
B)  The PA is suing the client for non-payment of fees. 
C)  The fees from one audit client comprise 65% of the PA's total billings for the year. 
D)  The PA serves in an honorary and non-participating role as a director for a non-profit audit client. 
A)  The PA received a set of professional-quality, graphite golf clubs from a client as an expression of appreciation for the quality of the work performed. 
B)  The PA is suing the client for non-payment of fees. 
C)  The fees from one audit client comprise 65% of the PA's total billings for the year. 
D)  The PA serves in an honorary and non-participating role as a director for a non-profit audit client.

Question 18

If a CPA is expelled from his or her provincial institute, what does that mean in practical terms?

Accepted Answer

A)  The member can no longer use the initials CPA behind his or her name on any cards or correspondence. 
B)  The member can no longer practice as an accountant. 
C)  The member will no longer be permitted to practice as a public accountant in Canada. 
D)  The member will no longer be permitted to receive copies of the CPA magazine. 
A)  The member can no longer use the initials CPA behind his or her name on any cards or correspondence. 
B)  The member can no longer practice as an accountant. 
C)  The member will no longer be permitted to practice as a public accountant in Canada. 
D)  The member will no longer be permitted to receive copies of the CPA magazine.

Question 19

Which of the following statements regarding advertising is FALSE?

Accepted Answer

A)  Advertising may not create false or unjustified expectations of favorable results. 
B)  Advertising may not imply the ability to influence any court, tribunal, regulatory agency, or similar body or official. 
C)  Advertising may contain a fee estimate even if the public accountant (P
A)  knows it is likely to be substantially increased. 
D)  Advertising may not contain any representation that is likely to cause a reasonable person to misunderstand or be deceived, or that contravenes professional good taste. 
A)  Advertising may not create false or unjustified expectations of favorable results. 
B)  Advertising may not imply the ability to influence any court, tribunal, regulatory agency, or similar body or official. 
C)  Advertising may contain a fee estimate even if the public accountant (P
A)  knows it is likely to be substantially increased. 
D)  Advertising may not contain any representation that is likely to cause a reasonable person to misunderstand or be deceived, or that contravenes professional good taste.

Question 20

Discuss communications between predecessor and successor auditors.

Accepted Answer

Successor auditors are required to make

Which of the following statements is FALSE when a public accountant (PA) has an investment in a non-client investor?

If a discipline committee requires a member to take continuing professional education, and the member fails to complete it in the required time, what is the likely further penalty?

What are the sanctions that can be imposed by CPA Ontario if a member is found guilty of violating one of the rules of professional conduct?

Which of the following statements regarding confidentiality principles is FALSE?

Which of the following statement regarding advertising is FALSE?

In which of the following circumstances would a CPA be in violation of the "Rules of Professional Conduct" in quoting a fee to a client?

Which of the following statements regarding communications between predecessor and successor auditors is FALSE?

How are competence and due care best described?

Whenever there is a conflict-of-interest situation for the auditor, there is a potential to create a threat to the auditor's independent state of mind.

Independence is not impaired if a public accountant (PA) serves on an organization's board of directors.

The duty of confidentiality requires a public accountant (PA) to do which of the following?

Discuss self-regulation discipline and public regulation discipline.

Describe how actual or threatened litigation affects auditor independence.

The interpretations related to the rules governing objectivity or independence allow ________.

When a public accountant (PA) and a client move into an adversary relationship and away from the cooperative one needed in an assurance engagement, independence is threatened by appearances of the PA trying to serve his or her own best interests.

In which of the following situations would a public accountant (PA) still be considered independent?

If a CPA is expelled from his or her provincial institute, what does that mean in practical terms?

Which of the following statements regarding advertising is FALSE?

Discuss communications between predecessor and successor auditors.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters

Exam 18: Professional Rules of Conduct Details and Auditor Responsibilities

Which of the following statements is FALSE when a public accountant (PA) has an investment in a non-client investor?

If a discipline committee requires a member to take continuing professional education, and the member fails to complete it in the required time, what is the likely further penalty?

What are the sanctions that can be imposed by CPA Ontario if a member is found guilty of violating one of the rules of professional conduct?

Which of the following statements regarding confidentiality principles is FALSE?

Which of the following statement regarding advertising is FALSE?

In which of the following circumstances would a CPA be in violation of the "Rules of Professional Conduct" in quoting a fee to a client?

Which of the following statements regarding communications between predecessor and successor auditors is FALSE?

How are competence and due care best described?

Whenever there is a conflict-of-interest situation for the auditor, there is a potential to create a threat to the auditor's independent state of mind.

Independence is not impaired if a public accountant (PA) serves on an organization's board of directors.

The duty of confidentiality requires a public accountant (PA) to do which of the following?

Discuss self-regulation discipline and public regulation discipline.

Describe how actual or threatened litigation affects auditor independence.

The interpretations related to the rules governing objectivity or independence allow ________.

When a public accountant (PA) and a client move into an adversary relationship and away from the cooperative one needed in an assurance engagement, independence is threatened by appearances of the PA trying to serve his or her own best interests.

In which of the following situations would a public accountant (PA) still be considered independent?

If a CPA is expelled from his or her provincial institute, what does that mean in practical terms?

Which of the following statements regarding advertising is FALSE?

Discuss communications between predecessor and successor auditors.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters