Question 1

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 C

Question 2

A CPA specializes in helping businesses evaluate their future prospects and create successful budgets. As part of this process, the CPA invariably learns confidential information about a company's future. To avoid potential liability, the CPA's engagement letter states upfront that "all information learned after the commencement of services shall not be subject to the duty of confidentiality." This CPA:

Accepted Answer

A)  May utilize for its own benefit information learned from this budgeting engagement because of this express waiver provision 
B)  May utilize for its own benefit information learned from this budgeting engagement because the duty of confidentiality does not apply to management consulting engagements 
C)  May not utilize information learned from this client relationship because the client did not give its specific consent 
D)  May not utilize information learned from this client relationship because the duty of confidentiality can never be waived 
A)  May utilize for its own benefit information learned from this budgeting engagement because of this express waiver provision 
B)  May utilize for its own benefit information learned from this budgeting engagement because the duty of confidentiality does not apply to management consulting engagements 
C)  May not utilize information learned from this client relationship because the client did not give its specific consent 
D)  May not utilize information learned from this client relationship because the duty of confidentiality can never be waived C

Question 3

When does a CPA's duty of confidentiality begin? When does it terminate?

Accepted Answer

A CPA's duty of confidentiality begins as soon as they are engaged by a client to provide professional services. This duty continues throughout the duration of the engagement and even after it has ended. The duty of confidentiality does not have a specific termination date and extends to all client information obtained during the course of the professional relationship. It is important for CPAs to uphold this duty even after the engagement has ended to maintain the trust and integrity of the profession. However, there are certain circumstances where a CPA may be required to disclose confidential information, such as when compelled by law or when authorized by the client. Overall, the duty of confidentiality is a fundamental ethical obligation for CPAs and should be upheld with the utmost care and diligence.

Question 4

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

Question 5

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 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

The federal tax law grants CPAs acting as tax advisors:

Accepted Answer

A)  A comprehensive privilege against having to disclose the identities of clients who file late tax returns or do not file tax returns at all 
B)  A limited privilege against having to disclose certain client information 
C)  An absolute privilege against having to disclose client information and makes it a crime for a tax advisor to make such a disclosure 
D)  A comprehensive privilege against having to disclose all tax-related client information 
A)  A comprehensive privilege against having to disclose the identities of clients who file late tax returns or do not file tax returns at all 
B)  A limited privilege against having to disclose certain client information 
C)  An absolute privilege against having to disclose client information and makes it a crime for a tax advisor to make such a disclosure 
D)  A comprehensive privilege against having to disclose all tax-related client information

Question 8

The AICPA Code of Professional Conduct has established for professional accountants:

Accepted Answer

A)  A duty of confidentiality only if this duty has been adopted or ratified by a particular state's accountancy licensing board 
B)  A duty of confidentiality , but not an accountant-client privilege 
C)  An accountant-client privilege, but not a duty of confidentiality 
D)  Both a duty of confidentiality and an accountant-client privilege 
A)  A duty of confidentiality only if this duty has been adopted or ratified by a particular state's accountancy licensing board 
B)  A duty of confidentiality , but not an accountant-client privilege 
C)  An accountant-client privilege, but not a duty of confidentiality 
D)  Both a duty of confidentiality and an accountant-client privilege

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

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 11

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 12

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

Question 13

Upon returning home after a long workday, a CPA told her husband that she "had a lunch meeting earlier that day with the Controller of her new client, Abnomacious, Inc., and that the Controller ate a really expensive seafood platter." Disclosure of this information to her husband:

Accepted Answer

A)  Likely violated the duty of confidentiality 
B)  Likely did not violate the duty of confidentiality 
C)  Could not have violated the duty of confidentiality because communications between spouses are protected by the marital exemption 
D)  Could not have violated the duty of confidentiality because this duty applies only to individuals, not to corporations 
A)  Likely violated the duty of confidentiality 
B)  Likely did not violate the duty of confidentiality 
C)  Could not have violated the duty of confidentiality because communications between spouses are protected by the marital exemption 
D)  Could not have violated the duty of confidentiality because this duty applies only to individuals, not to corporations

Question 14

If a paid tax return preparer mistakenly 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)  Nonetheless 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 or possible imprisonment because her misconduct was accidental 
A)  Nonetheless 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 or possible imprisonment because her misconduct was accidental

Question 15

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 16

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 17

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

Question 18

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 19

During the course of working as an external auditor, you discovered that your audit client is going to build a new luxury ski resort in rural Utah. As a result, you purchased a vacation home near that resort in the expectation that housing prices will benefit from the announcement of a luxury resort being built nearby. Your action:

Accepted Answer

A)  Was unethical only if it precluded your client from pursuing this opportunity to earn a profit on nearby real estate 
B)  Was unethical even though it caused no harm to your client 
C)  Was ethical because the insider trading laws only concern purchases of securities 
D)  Was ethical because your action was expressly allowed by the IFAC code of conduct 
A)  Was unethical only if it precluded your client from pursuing this opportunity to earn a profit on nearby real estate 
B)  Was unethical even though it caused no harm to your client 
C)  Was ethical because the insider trading laws only concern purchases of securities 
D)  Was ethical because your action was expressly allowed by the IFAC code of conduct

Question 20

What is the difference between the duty of confidentiality and the accountant- client privilege?

Accepted Answer

The duty of confidentiality and the acco

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

When does a CPA's duty of confidentiality begin? When does it terminate?

The IRS will:

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

The federal tax law grants CPAs acting as tax advisors:

The AICPA Code of Professional Conduct has established for professional accountants:

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

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:

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

Upon returning home after a long workday, a CPA told her husband that she "had a lunch meeting earlier that day with the Controller of her new client, Abnomacious, Inc., and that the Controller ate a really expensive seafood platter." Disclosure of this information to her husband:

If a paid tax return preparer mistakenly 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:

The federal accountant-client privilege:

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:

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

What is the difference between the duty of confidentiality and the accountant- client privilege?

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

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Exam 9: Confidentiality

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

When does a CPA's duty of confidentiality begin? When does it terminate?

The IRS will:

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

The federal tax law grants CPAs acting as tax advisors:

The AICPA Code of Professional Conduct has established for professional accountants:

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

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:

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

Upon returning home after a long workday, a CPA told her husband that she "had a lunch meeting earlier that day with the Controller of her new client, Abnomacious, Inc., and that the Controller ate a really expensive seafood platter." Disclosure of this information to her husband:

If a paid tax return preparer mistakenly 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:

The federal accountant-client privilege:

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:

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

What is the difference between the duty of confidentiality and the accountant- client privilege?

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