Question 1

The basic rationale for permitting CPAs to accept commissions is that

Accepted Answer

A)   It does not affect independence in attest functions.
B)   Professional liability insurance policies permit commission work.
C)   State boards of accounting permit commissions and contingent fees.
D)   Other professionals charge commissions in personal financial planning engagements.E) None of the above
F) B) and C)

Question 2

CPAs are not permitted to advertise except in a few instances.

Accepted Answer

A) True 
 B)False

Question 3

If a CPA refuses a client because there would be a potential violation of the AICPA Code of Professional Conduct,the CPA is following the ethical philosophy of the

Accepted Answer

A)   Imperative principle.
B)   Utilitarianism principle.
C)   Generalization principle.
D)   Moral principle.E) C) and D)
F) A) and B)

Question 4

In considering general ethics,the primary goal is to arrive at a set of acceptable methods for making ethical decisions.

Accepted Answer

A) True 
 B)False

Question 5

The AICPA has interpreted Rule 301,Confidential Client Information,to explicitly allow a CPA to divulge confidential client information to

Accepted Answer

A)   The SEC.
B)   The U.S. Department of Justice.
C)   The AICPA Professional Ethics Division.
D)   The Federal Trade Commission.E) C) and D)
F) B) and C)

Question 6

For each of the following cases indicate if the action by a member CPA is a violation of the AICPA Code of Professional Conduct and cite the relevant rule.
A. Disclosed client information to another CPA firm during the discussion of a merger of the two firms
B. Allowed a company to change the way it values inventory to a method that is not GAAP because following GAAP would be misleading
C. Had a new car loan from a bank that is a client when the bank holds the title to the car
D. Based a fee on approval of a bank loan dependent on audited financial statements
E. Did not comply with Government Auditing Standards on a government audit

Accepted Answer

The answer of For each of the following cases indicate...

Question 7

Which of the following "bodies designated by Council" have been authorized to promulgate accounting principles enforceable under Rule 203 of the AICPA Code of Professional Conduct?

Accepted Answer

A)   Auditing Standards Board.
B)   Federal Accounting Standards Advisory Board.
C)   Consulting Services Executive Committee.
D)   Accounting and Review Services Committee.E) B) and D)
F) A) and B)

Question 8

Which of the following is required for a CPA firm to designate itself as "Members of the American Institute of Certified Public Accountants" on its letterhead?

Accepted Answer

A)   All owners must be members.
B)   The owners whose names appear in the firm name must be members.
C)   At least one of the owners must be a member.
D)   The firm must be a dues-paying member.E) None of the above
F) B) and D)

Question 9

CPA Kara Rambo is the auditor of Ajax Corporation.Her audit independence will not be considered impaired if she

Accepted Answer

A)   Owns $1,000 worth of Ajax stock.
B)   Has a husband who owns $1,000 worth of Ajax stock.
C)   Has a sister who is the financial vice president of Ajax.
D)   Owns $1,000 worth of the stock of Pericles Corporation, which is controlled by Ajax as a result of Ajax's ownership of 40 percent of Pericles' stock, and Pericles contributes 3 percent of the total assets and income in Ajax's financial statements.E) A) and B)
F) B) and D)

Question 10

A member in public practice can receive a contingent fee for

Accepted Answer

A)   An audit or review of a financial statement.
B)   A compilation of a financial statement.
C)   An examination of prospective financial statements.
D)   Representing a client in an IRS tax audit.E) A) and C)
F) A) and B)

Question 11

If a public accounting firm says it always follows the rule that requires adherence to FASB pronouncements in order to give a standard unqualified auditors' report,it is following a philosophy characterized by

Accepted Answer

A)   The imperative principle in moral philosophy.
B)   The utilitarian principle in moral philosophy.
C)   The generalization principle in moral philosophy.
D)   Reliance on members' collective conscience.E) B) and C)
F) A) and C)

Question 12

Financial statement audit services are the only engagements that require independence.

Accepted Answer

A) True 
 B)False

Question 13

Rule 501 on Acts Discreditable to the Profession is often referred to as the ___________________________ of the Code.

Accepted Answer

The answer of Rule 501 on Acts Discreditable to the...

Question 14

Which of the following is true if an auditor performs nonaudit services for a government entity?

Accepted Answer

A)   The scope of the audit must be reduced so that the auditor does not audit the area for which the nonaudit work was performed.
B)   The auditor is prohibited from providing nonaudit work in areas directly related to the production of accounting information.
C)   The senior members of the government entity must document their review of the nonaudit service and indicate why it is appropriate for the auditors to perform this service.
D)   The scope of the audit cannot be reduced because the nonaudit work was performed by the public accounting firm.E) B) and C)
F) C) and D)

Question 15

The ____________________ principle directs a decision maker to act according to the requirements of an ethical rule.

Accepted Answer

The answer of The ____________________ principle directs a decision maker...

Question 16

A CPA can accept a contingent fee for a compilation report to be used by a bank for purposes of granting a loan to the client as long as the CPA discloses a lack of independence in the report.

Accepted Answer

A) True 
 B)False

Question 17

Dara & Co.audits Hill Corporation.Ellie is the engagement partner on the audit with an office in Buffalo Grove.Which of the following would not be considered a covered member?

Accepted Answer

A)   Jason, who is a member of the attest engagement team with an office in Elmhurst.
B)   Adam, who is a tax partner and provided 50 hours of tax service to Hill Company during the year of the audit with an office in Elmhurst.
C)   Ben, a partner in Dara & Company, with an office in Buffalo Grove.
D)   Julie, a partner in Dara & Company, with an office in Elmhurst.E) C) and D)
F) A) and C)

Question 18

Most state boards of accountancy do not

Accepted Answer

A)   Issue licenses to practice accounting.
B)   Regulate tax practice.
C)   Limit the attest function to license holders.
D)   Administer an ethics examination.E) A) and B)
F) None of the above

Question 19

Which of the following sections is not included in the AICPA Rules of Conduct?

Accepted Answer

A)   Responsibilities to Clients.
B)   Independence, Integrity, and Objectivity.
C)   Responsibilities to Colleagues.
D)   General and Technical Standards.E) C) and D)
F) All of the above

Question 20

According to Rule 203,Accounting Principles,requires the auditor to adhere to official pronouncements except when

Accepted Answer

A)   Complying would violate client confidentiality.
B)   Pending legislation may change the reporting requirements of the client.
C)   Adherence to a pronouncement would be misleading.
D)   It has been established that financial statement users prefer an alternative presentation of information.E) None of the above
F) B) and D)

Exam 14: Professional Ethics

In considering general ethics,the primary goal is to arrive at a set of acceptable methods for making ethical decisions.

Correct Answer
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CPAs are not permitted to advertise except in a few instances.

Correct Answer
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Financial statement audit services are the only engagements that require independence.

Correct Answer
verified

CPA Kara Rambo is the auditor of Ajax Corporation.Her audit independence will not be considered impaired if she

Correct Answer
verified

If a CPA refuses a client because there would be a potential violation of the AICPA Code of Professional Conduct,the CPA is following the ethical philosophy of the

Correct Answer
verified

Correct Answer
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Rule 501 on Acts Discreditable to the Profession is often referred to as the ___________________________ of the Code.

Correct Answer
verified

Which of the following is true if an auditor performs nonaudit services for a government entity?

Correct Answer
verified

A member in public practice can receive a contingent fee for

Correct Answer
verified

Most state boards of accountancy do not

Correct Answer
verified

A CPA can accept a contingent fee for a compilation report to be used by a bank for purposes of granting a loan to the client as long as the CPA discloses a lack of independence in the report.

Correct Answer
verified

If a public accounting firm says it always follows the rule that requires adherence to FASB pronouncements in order to give a standard unqualified auditors' report,it is following a philosophy characterized by

Correct Answer
verified

Which of the following is required for a CPA firm to designate itself as "Members of the American Institute of Certified Public Accountants" on its letterhead?

Correct Answer
verified

The ____________________ principle directs a decision maker to act according to the requirements of an ethical rule.

Correct Answer
verified

According to Rule 203,Accounting Principles,requires the auditor to adhere to official pronouncements except when

Correct Answer
verified

The AICPA has interpreted Rule 301,Confidential Client Information,to explicitly allow a CPA to divulge confidential client information to

Correct Answer
verified

The basic rationale for permitting CPAs to accept commissions is that

Correct Answer
verified

Dara & Co.audits Hill Corporation.Ellie is the engagement partner on the audit with an office in Buffalo Grove.Which of the following would not be considered a covered member?

Correct Answer
verified

Which of the following "bodies designated by Council" have been authorized to promulgate accounting principles enforceable under Rule 203 of the AICPA Code of Professional Conduct?

Correct Answer
verified

Which of the following sections is not included in the AICPA Rules of Conduct?

Correct Answer
verified

Exam 14: Professional Ethics

In considering general ethics,the primary goal is to arrive at a set of acceptable methods for making ethical decisions.

Correct AnswerverifiedShow Answer

CPAs are not permitted to advertise except in a few instances.

Correct AnswerverifiedShow Answer

Financial statement audit services are the only engagements that require independence.

Correct AnswerverifiedShow Answer

CPA Kara Rambo is the auditor of Ajax Corporation.Her audit independence will not be considered impaired if she

Correct AnswerverifiedShow Answer

If a CPA refuses a client because there would be a potential violation of the AICPA Code of Professional Conduct,the CPA is following the ethical philosophy of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Rule 501 on Acts Discreditable to the Profession is often referred to as the ___________________________ of the Code.

Correct AnswerverifiedShow Answer

Which of the following is true if an auditor performs nonaudit services for a government entity?

Correct AnswerverifiedShow Answer

A member in public practice can receive a contingent fee for

Correct AnswerverifiedShow Answer

Most state boards of accountancy do not

Correct AnswerverifiedShow Answer

A CPA can accept a contingent fee for a compilation report to be used by a bank for purposes of granting a loan to the client as long as the CPA discloses a lack of independence in the report.

Correct AnswerverifiedShow Answer

If a public accounting firm says it always follows the rule that requires adherence to FASB pronouncements in order to give a standard unqualified auditors' report,it is following a philosophy characterized by

Correct AnswerverifiedShow Answer

Which of the following is required for a CPA firm to designate itself as "Members of the American Institute of Certified Public Accountants" on its letterhead?

Correct AnswerverifiedShow Answer

The ____________________ principle directs a decision maker to act according to the requirements of an ethical rule.

Correct AnswerverifiedShow Answer

According to Rule 203,Accounting Principles,requires the auditor to adhere to official pronouncements except when

Correct AnswerverifiedShow Answer

The AICPA has interpreted Rule 301,Confidential Client Information,to explicitly allow a CPA to divulge confidential client information to

Correct AnswerverifiedShow Answer

The basic rationale for permitting CPAs to accept commissions is that

Correct AnswerverifiedShow Answer

Dara & Co.audits Hill Corporation.Ellie is the engagement partner on the audit with an office in Buffalo Grove.Which of the following would not be considered a covered member?

Correct AnswerverifiedShow Answer

Which of the following "bodies designated by Council" have been authorized to promulgate accounting principles enforceable under Rule 203 of the AICPA Code of Professional Conduct?

Correct AnswerverifiedShow Answer

Which of the following sections is not included in the AICPA Rules of Conduct?

Correct AnswerverifiedShow Answer

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