Question 1

Which of the following statements regarding advertising is FALSE?

Accepted Answer

A) Advertising may not create false or unjustified expectations of favourable 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 PA 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 favourable 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 PA 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 2

In which of the following circumstances would a CA 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 3

Firms commonly obtain new clients through advertising.

Accepted Answer

A) True 
 B)False

Question 4

The interpretation of the phrase "acts discreditable to the profession" would NOT include ________.

Accepted Answer

A) membership in an activist political party 
B) withholding a client's books until a professional fee is paid 
C) being convicted of a criminal offence 
D) permitting others to make misleading entries in records 
A) membership in an activist political party 
B) withholding a client's books until a professional fee is paid 
C) being convicted of a criminal offence 
D) permitting others to make misleading entries in records

Question 5

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

Accepted Answer

Sanctions include:
 reprimand
 imposit

Question 6

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

Accepted Answer

A) Successor auditors are required to make certain enquiries 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 enquiries 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 7

Once PAs retire from a firm,they are no longer required to maintain independence from former clients.

Accepted Answer

A) True 
 B)False

Question 8

How are competence and due care best described?

Accepted Answer

A) Competence and due care both refer to 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 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 9

According to the profession's rules of conduct,an auditor would be considered independent in which of the following instances?

Accepted Answer

A) The auditor is the officially appointed stock transfer agent of a client. 
B) The auditor has a personal chequing account in a branch of a client bank. 
C) The client has not paid its audit fees for the past three years. 
D) The client is the only tenant in a commercial building owned by the auditor. 
A) The auditor is the officially appointed stock transfer agent of a client. 
B) The auditor has a personal chequing account in a branch of a client bank. 
C) The client has not paid its audit fees for the past three years. 
D) The client is the only tenant in a commercial building owned by the auditor.

Question 10

ICAO Rule 214 regarding fee quotation is ultimately concerned with ________.

Accepted Answer

A) auditor independence 
B) confidentiality 
C) audit quality 
D) contingency fees 
A) auditor independence 
B) confidentiality 
C) audit quality 
D) contingency fees

Question 11

In which of the following situations would a 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 nonprofit 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 nonprofit audit client.

Question 12

Discuss the rules allowing members to practise in any form of organization.

Accepted Answer

The rules allow members to practise in a

Question 13

Which of the following statements regarding independence with respect to accounting and other services is FALSE?

Accepted Answer

A) If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services. 
B) If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,it might be perceived that the PA has both prepared the financial statements or other data and given an audit report or other assurance on his or her own work. 
C) The PA cannot perform the bookkeeping for a company and also provide assurance services. 
D) The PA can counsel the client management about the accounting principle choices,but in the final analysis the management must be able to say,"These are our financial statements (or other data);we made the choices of accounting principles;we take primary responsibility for them." 
A) If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services. 
B) If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,it might be perceived that the PA has both prepared the financial statements or other data and given an audit report or other assurance on his or her own work. 
C) The PA cannot perform the bookkeeping for a company and also provide assurance services. 
D) The PA can counsel the client management about the accounting principle choices,but in the final analysis the management must be able to say,"These are our financial statements (or other data);we made the choices of accounting principles;we take primary responsibility for them."

Question 14

Successor auditors are required to make certain enquiries of predecessor auditors when a new client is obtained.

Accepted Answer

A) True 
 B)False

Question 15

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 16

As self-regulating bodies,professional institutes have a duty to investigate all written complaints received about their members and students accepted into their programs.

Accepted Answer

A) True 
 B)False

Question 17

Discuss communications between predecessor and successor auditors.

Accepted Answer

Successor auditors are required to make

Question 18

When a 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 19

If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following conditions is consistent with a contingency fee?

Accepted Answer

A) Its terms must be contracted for before any services are performed. 
B) Its terms must be contracted for after any services are performed. 
C) The fees are fixed by a court. 
D) The amount paid for the performance is not affected by the results obtained. 
A) Its terms must be contracted for before any services are performed. 
B) Its terms must be contracted for after any services are performed. 
C) The fees are fixed by a court. 
D) The amount paid for the performance is not affected by the results obtained.

Exam 18: Professional Rules of Conduct Details and Auditor Responsibilities

Which of the following statements regarding advertising is FALSE?

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

Firms commonly obtain new clients through advertising.

The interpretation of the phrase "acts discreditable to the profession" would NOT include ________.

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

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

Once PAs retire from a firm,they are no longer required to maintain independence from former clients.

How are competence and due care best described?

According to the profession's rules of conduct,an auditor would be considered independent in which of the following instances?

ICAO Rule 214 regarding fee quotation is ultimately concerned with ________.

In which of the following situations would a PA still be considered independent?

Discuss the rules allowing members to practise in any form of organization.

Which of the following statements regarding independence with respect to accounting and other services is FALSE?

Successor auditors are required to make certain enquiries of predecessor auditors when a new client is obtained.

Which of the following statement regarding advertising is FALSE?

As self-regulating bodies,professional institutes have a duty to investigate all written complaints received about their members and students accepted into their programs.

Discuss communications between predecessor and successor auditors.

When a 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.

If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services.

Which of the following conditions is consistent with a contingency fee?

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

hapter 15 Completing the Audit Work

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

Other Public Accounting Services and Reportsreviews and Compilations

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud Auditing

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