Question 1

Distinguish between the following theories of ethical behavior:
 utilitarianism,a rights-based approach,and a justice-based approach.

Accepted Answer

Utilitarianism focuses on the consequenc...

Question 2

What is meant by the Code of Professional Conduct's definition of "holding out"?

Accepted Answer

A)   Informing a client about one's status as a CPA.
B)   Withholding an audit report until the fee is paid.
C)   Not sharing audit documentation with a successor auditor.
D)   Not suggesting that management make an adjusting entry that is deemed immaterial.

Question 3

If a CPA owns an insurance policy issued by an attest client,independence would be considered impaired,even if the policy was purchased under the insurance company's normal terms and procedures and does not offer an investment option.

Accepted Answer

A) True 
 B)False

Question 4

When can a CPA disclose confidential information without the client's consent?

Accepted Answer

A CPA can disclose confidential informat...

Question 5

The term "ethics" refers to a person's propensity to follow the laws of the land.

Accepted Answer

A) True 
 B)False

Question 6

In which of the following circumstances would a CPA who audits XM Corporation lack independence?

Accepted Answer

A)   The CPA and XM's president are both on the board of directors of COD Corporation.
B)   The CPA and XM's president each owns 25 percent of FOB Corporation, a closely-held company.
C)   The CPA has an automobile loan from XM, which is a savings and loan organization and the loan is collateralized by the automobile.
D)   The CPA reduced XM's usual audit fee by 40 percent because XM's financial condition was unfavorable.

Question 7

Which of the following bodies ordinarily would have the authority to suspend or revoke a CPA's license to practice public accounting?

Accepted Answer

A)   The SEC.
B)   The AICPA.
C)   A state CPA society.
D)   A state board of accountancy.

Question 8

Which of the following is not a Principle of Professional Conduct as defined by the Code of Professional Conduct?

Accepted Answer

A)   Integrity.
B)   Due care.
C)   Reporting.
D)   Scope and nature of services. C

Question 9

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

Accepted Answer

A) True 
 B)False

Question 10

The independence standards issued by the PCAOB do not prohibit the provision of tax services to an attest client.

Accepted Answer

A) True 
 B)False

Question 11

Identify the primary purposes of Rules 201-203 of the Rules of Conduct.

Accepted Answer

Rule 201 captures much of what is contained in the 10 generally accepted auditing standards and codifies it as part of the Code.Rule 202 requires that members of the AICPA comply with professional standards when performing professional services,whether or not they are practicing in public accounting.Rule 203 was adopted to require compliance by CPAs with GAAP.

Question 12

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence.What are the three basic principles?

Accepted Answer

The three basic principles are: (1)an au...

Question 13

The SEC has issued independence rules that differ from the AICPA's in all of the following areas except:

Accepted Answer

A)   Working paper documentation.
B)   Provision of other professional services.
C)   Human resource and compensation-related issues.
D)   Required communication. A

Question 14

In order to achieve effective quality control,a firm of independent auditors should establish policies and procedures for

Accepted Answer

A)   Determining the minimum procedures necessary for unaudited financial statements.
B)   Setting the scope of audit work.
C)   Deciding whether to accept or continue a client.
D)   Setting the scope of internal control study and evaluation.

Question 15

With respect to ethics,the justice-based approach

Accepted Answer

A)   Suggests that auditors should always verify ownership of a client's material tangible assets.
B)   Is primarily concerned with equity and impartiality.
C)   Suggests that an individual's actions should not violate the rights of any individual.
D)   Recognizes that decisions involve trade-offs between costs and benefits.

Question 16

In which of the following instances would the independence of the CPA not be considered to be impaired? The CPA has been retained as the auditor of a

Accepted Answer

A)   Charitable organization in which an employee of the CPA serves as treasurer.
B)   Municipality in which the CPA owns $25,000 of the $2,500,000 indebtedness of the municipality.
C)   Restaurant where the CPA dines frequently.
D)   Company in which the CPA's private investment club owns a one-tenth interest.

Question 17

A CPA's license to practice will ordinarily be suspended or revoked automatically for

Accepted Answer

A)   Controlling the bookkeeping for a compilation client.
B)   Conviction of willful failure to file personal income tax return.
C)   Refusing to respond to an inquiry by the AICPA practice review committee.
D)   Accepting compensation while honoring a subpoena to appear as an expert witness.

Question 18

A CPA firm's personnel partner periodically studies the CPA firm's personnel advancement experience to ascertain whether the individuals who were assigned increased degrees of responsibility met predetermined criteria.This is evidence of the CPA firm's adherence to prescribed standards of

Accepted Answer

A)   Quality control.
B)   Due professional care.
C)   Supervision and review.
D)   Fieldwork.

Question 19

The rules contained in Section 100 cover issues relating to independence,integrity,and auditing standards.

Accepted Answer

A) True 
 B)False

Question 20

Under which of the following circumstances would the independence of a CPA be considered impaired if the CPA,who also is an attorney,serves as auditor and provides legal services to the same client?

Accepted Answer

A)   When the CPA, as legal agent, consummates a business acquisition for the client.
B)   When the CPA's audit fees and legal fees are not billed separately.
C)   When the CPA uses legal expertise to research a question of income tax law.
D)   When the legal services consist of an analysis of the terms of an existing lease agreement.

Exam 19: Professional Conduct,Independence,and Quality Control

Distinguish between the following theories of ethical behavior: utilitarianism,a rights-based approach,and a justice-based approach.

Correct Answer
verified
Utilitarianism focuses on the consequenc...
View Answer

What is meant by the Code of Professional Conduct's definition of "holding out"?

Correct Answer
verified

If a CPA owns an insurance policy issued by an attest client,independence would be considered impaired,even if the policy was purchased under the insurance company's normal terms and procedures and does not offer an investment option.

Correct Answer
verified

When can a CPA disclose confidential information without the client's consent?

Correct Answer
verified
A CPA can disclose confidential informat...
View Answer

The term "ethics" refers to a person's propensity to follow the laws of the land.

Correct Answer
verified

In which of the following circumstances would a CPA who audits XM Corporation lack independence?

Correct Answer
verified

Which of the following bodies ordinarily would have the authority to suspend or revoke a CPA's license to practice public accounting?

Correct Answer
verified

Which of the following is not a Principle of Professional Conduct as defined by the Code of Professional Conduct?

Correct Answer
verified
C

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

Correct Answer
verified

The independence standards issued by the PCAOB do not prohibit the provision of tax services to an attest client.

Correct Answer
verified

Identify the primary purposes of Rules 201-203 of the Rules of Conduct.

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence.What are the three basic principles?

Correct Answer
verified
The three basic principles are: (1)an au...
View Answer

The SEC has issued independence rules that differ from the AICPA's in all of the following areas except:

Correct Answer
verified
A

In order to achieve effective quality control,a firm of independent auditors should establish policies and procedures for

Correct Answer
verified

With respect to ethics,the justice-based approach

Correct Answer
verified

In which of the following instances would the independence of the CPA not be considered to be impaired? The CPA has been retained as the auditor of a

Correct Answer
verified

A CPA's license to practice will ordinarily be suspended or revoked automatically for

Correct Answer
verified

A CPA firm's personnel partner periodically studies the CPA firm's personnel advancement experience to ascertain whether the individuals who were assigned increased degrees of responsibility met predetermined criteria.This is evidence of the CPA firm's adherence to prescribed standards of

Correct Answer
verified

The rules contained in Section 100 cover issues relating to independence,integrity,and auditing standards.

Correct Answer
verified

Under which of the following circumstances would the independence of a CPA be considered impaired if the CPA,who also is an attorney,serves as auditor and provides legal services to the same client?

Correct Answer
verified

Exam 19: Professional Conduct,Independence,and Quality Control

Distinguish between the following theories of ethical behavior: utilitarianism,a rights-based approach,and a justice-based approach.

Correct AnswerverifiedUtilitarianism focuses on the consequenc...View AnswerShow Answer

What is meant by the Code of Professional Conduct's definition of "holding out"?

Correct AnswerverifiedShow Answer

If a CPA owns an insurance policy issued by an attest client,independence would be considered impaired,even if the policy was purchased under the insurance company's normal terms and procedures and does not offer an investment option.

Correct AnswerverifiedShow Answer

When can a CPA disclose confidential information without the client's consent?

Correct AnswerverifiedA CPA can disclose confidential informat...View AnswerShow Answer

The term "ethics" refers to a person's propensity to follow the laws of the land.

Correct AnswerverifiedShow Answer

In which of the following circumstances would a CPA who audits XM Corporation lack independence?

Correct AnswerverifiedShow Answer

Which of the following bodies ordinarily would have the authority to suspend or revoke a CPA's license to practice public accounting?

Correct AnswerverifiedShow Answer

Which of the following is not a Principle of Professional Conduct as defined by the Code of Professional Conduct?

Correct AnswerverifiedC

PCAOB rules require tax services provided by a public company auditor to be considered and approved by the company's audit committee.

Correct AnswerverifiedShow Answer

The independence standards issued by the PCAOB do not prohibit the provision of tax services to an attest client.

Correct AnswerverifiedShow Answer

Identify the primary purposes of Rules 201-203 of the Rules of Conduct.

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence.What are the three basic principles?

Correct AnswerverifiedThe three basic principles are: (1)an au...View AnswerShow Answer

The SEC has issued independence rules that differ from the AICPA's in all of the following areas except:

Correct AnswerverifiedA

In order to achieve effective quality control,a firm of independent auditors should establish policies and procedures for

Correct AnswerverifiedShow Answer

With respect to ethics,the justice-based approach

Correct AnswerverifiedShow Answer

In which of the following instances would the independence of the CPA not be considered to be impaired? The CPA has been retained as the auditor of a

Correct AnswerverifiedShow Answer

A CPA's license to practice will ordinarily be suspended or revoked automatically for

Correct AnswerverifiedShow Answer

A CPA firm's personnel partner periodically studies the CPA firm's personnel advancement experience to ascertain whether the individuals who were assigned increased degrees of responsibility met predetermined criteria.This is evidence of the CPA firm's adherence to prescribed standards of

Correct AnswerverifiedShow Answer

The rules contained in Section 100 cover issues relating to independence,integrity,and auditing standards.

Correct AnswerverifiedShow Answer

Under which of the following circumstances would the independence of a CPA be considered impaired if the CPA,who also is an attorney,serves as auditor and provides legal services to the same client?

Correct AnswerverifiedShow Answer

Correct Answer
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Utilitarianism focuses on the consequenc...
View Answer

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Correct Answer
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A CPA can disclose confidential informat...
View Answer

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C

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The three basic principles are: (1)an au...
View Answer

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A

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