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Professional Responsibilities : CODE OF PROFESSIONAL CONDUCT

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CPA LICENSURE EXAMINATION 4. AUDITING THEORY (13. THE CODE OF ETHICS AND REPUBLIC ACT 9298) Quiz on Professional Responsibilities : CODE OF PROFESSIONAL CONDUCT, created by Mark Anthony Pusing on 13/02/2016.
Mark Anthony Pusing
Quiz by Mark Anthony Pusing, updated more than 1 year ago
Mark Anthony Pusing
Created by Mark Anthony Pusing about 8 years ago
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Resource summary

Question 1

Question
Wiley: Which of the following best describes what is meant by the term Generally accepted auditing standards?
Answer
  • a. Rules acknowledge by the accounting profession because of their universal application.
  • b. Pronouncements issued by the auditing standards Board.
  • c. Measures of the quality of the auditors performance.
  • d. Procedures ti be used to gather evidence to support financial statement.

Question 2

Question
For which of the ff. can a member of the AICPA received an automatic expulsion from the AICPA? 1. Member is convicted of a felony. 2. Member files his own fraudulent tax return. 3. member files fraudulent tax return for client knowing that is fraudulent.
Answer
  • a. 1 only
  • b. 1 & 2 only
  • c. 1 & 3 only
  • d. 1,2,&3 only

Question 3

Question
Which of the ff. is an example of a safeguard implemented by the client that might mitigate a threat to independence?
Answer
  • a. Required continuing education for all attest engagement team members.
  • b. An effective corporate governance structure.
  • c. Required second partner review of an attest engagement
  • d. Management selection of the CPA firm.

Question 4

Question
Which of the following is a "self review" threat to member independence ?
Answer
  • a. An engagement team member has a spouse that serves as CFO of the attest client.
  • b. A second partner review is required on all attest engagement .
  • c. An engagement team member prepares invoices for the attest client.
  • d. An engagement team member has a direct financial interest in the attest client.

Question 5

Question
According to the standards of the profession, which of the of the ff. circumstances will prevent CPA performing audit engagements from being independent?
Answer
  • a. obtaining a collateralize automobile loan from a financial institution client.
  • b. Litigation with a client relating to billing for consulting services for which the amount is immaterial.
  • c. employment of the CPA's spouse as a client director of internal audit.
  • d. acting as an honorary trustee for a not-for profit organization client

Question 6

Question
The professions ethical standards most likely would be considered to have been violated when a CPA represents that specific consulting services will be performed for a stated fee and is apparent at the time of the representation that the:
Answer
  • a. Actual fee would be substantially higher.
  • b. Actual fee would be substantially lower than the fees charges by other CPAs for comparable services.
  • c. CPA would not be independent.
  • d. Fee was a competitive bid

Question 7

Question
According to the ethical standards of the profession, which of the ff acts is generally prohibited?
Answer
  • a. Issuing a modified report explaining a failure to follow a governmental regulatory agency's standards when conducting an attest service for a client.
  • b. Revealing confidential clients information during a a qualitative review of a professional practice by s team from the state CPA society.
  • c. Accepting a contingent fee for representing a client in an examination of the client federal tax return by an IRS agent.
  • d. Retaining client records after an engagement is terminated prior to completion

Question 8

Question
According to the professions ethical standards , which of the following events may justify a departure from a statement of a Statement of the Governmental Accounting Standards Board?
Answer
  • a. New Legislation (no) | Evolution of a new form of business transaction (yes)
  • b. a. New Legislation (yes) | Evolution of a new form of business transaction (no)
  • c. a. New Legislation (yes) | Evolution of a new form of business transaction (yes)
  • d. a. New Legislation (no) | Evolution of a new form of business transaction (no)

Question 9

Question
MAY a CPA hire for the CPA's public accounting firm a non-CPA system analyst who specializes in developing computer system?
Answer
  • a. YES, provided the CPA is qualified to perform each of the specialist tasks.
  • b. YES, provided the CPA is able to supervise the specialist and evaluate the specialist's end product.
  • c. No, because non- CPA professional are not permitted to be associated with CPA firms in public notice.
  • d. No, because developing computer system is not recognize as a service performed by public accountants.

Question 10

Question
Stepanie Seals is a CPA who is working as a controller for Brentwood Corporation. She is not in public practice. Which statement is true?
Answer
  • a. She may use the CPA designation on her business cards if she also puts her employment title on them.
  • b. She may use the CPA designation on her business card as long as she does not mention Brentwood Corporation or her title as a controller.
  • c. She may use the CPA designation on company transmittal but not on her business cards.
  • d. she may not use the CPA designation because she is not in public practice.

Question 11

Question
According to the standards pf the profession, which of the ff. activities would most likely NOT impair a CPA's independence?
Answer
  • a. Providing advisory services for a client.
  • b. Contracting with a client to supervise the clients office personnel.
  • c. Signing a clients check in emergency situation.
  • d. Accepting a luxurious gift from client

Question 12

Question
Which of the ff. reports maybe issued only by an accountant who is independent of a client?
Answer
  • a. Standard report on an examination of a financial forecast.
  • b. Report on consulting services.
  • c. Compilation report on historical financial statements.
  • d. compilation report on financial projection.

Question 13

Question
According to the standards of the profession, which of the ff. activities may be required in exercising due care?
Answer
  • a. Consulting with expert (yes) | Obtaining specialty Accreditation (yes).
  • b. a. Consulting with expert (yes) | Obtaining specialty Accreditation (no).
  • c. a. Consulting with expert (no) | Obtaining specialty Accreditation (yes).
  • d. a. Consulting with expert (no) | Obtaining specialty Accreditation (no).

Question 14

Question
Larry Sampson is a CPA and is serving as an expert witness in a trial concerning a corporations financial statements. Which of the ff. is (are) True? 1. Sampson's status as an expert witness is based upon his specialized knowledge, experience, and training; 2. Sampson is required by AICPA ruling to present his position objectively; 3. Sampson may regard himself as acting as an advocate.
Answer
  • a. 1 only.
  • b. 1 & 2 only.
  • c. 1 & 3 only.
  • d. 3 only.

Question 15

Question
According to the ethical standards of the profession, which of the ff. act is generally prohibited?
Answer
  • a. Purchasing a product from a thirst party and reselling it to a client.
  • b. Writing a financial management news letter promoted and sold buy a publishing company.
  • c. Accepting a commission for recommending a product to an audit client.
  • d. Accepting engagement obtained through the effort of third parties.

Question 16

Question
To exercise due professional care an auditor should :
Answer
  • a. Critically review the judgement exercised by those assisting in the audit.
  • b. Examine all available corroborating evidence supporting managements assertions.
  • c. design the audit to detect all instances of illegal acts.
  • d. Attain the proper balance of professional experience and formal education.

Question 17

Question
Kar, CPA, is a staff auditor participating in the audit engagement of Fort, Inc. Which of the ff. circumstances impairs Kar's independence?
Answer
  • a. During the period of the professional engagement, Fort gives Kar tickets to a football game worth $75.00
  • b. Kar owns stock in a corporation that Fort's 401 (k) plans also invest in.
  • c. Kar's friend, an employee of another local accounting firm, prepared Fort tax returns,
  • d. Kar's sibling is Director on Internal audit at Fort.

Question 18

Question
On June 1, 2008, a CPA obtained a $100,000 personal loan from a financial institution client for whom the CPA provided compilation services. The load was fully secured and considered material to the CPA's net worth. The CPA paid the loan in full on December 31, 2009. Is he CPA considered independent with respect to the audit of the clients December 31, 2009 financial statements?
Answer
  • a. Yes, because the loan was fully secured.
  • b. Yes, because the CPA was not required to be independent at the time the loan was secured.
  • c. No, because the CPA has a loan with the client during the period of a professional engagement.
  • d. No, because the CPA has a load with the client during the period covered by the financial statements.

Question 19

Question
Which of the following statements is (are) correct regarding a CPA employee of a CPA firm taking copies of information contained in the clients files when the CPA leaves the firm? 1. a CPA leaving a firm may take copies of information contained in clients files to assist another firm in serving that client; 2. a CPA leaving a firm may take copies of information contained in clients files as a method of gaining technical expertise.
Answer
  • a. 1 only.
  • b. 2 only.
  • c. Both 1 & 2
  • d. Neither 1 nor 2

Question 20

Question
Which of the following statement is correct regarding an accountant's working paper?
Answer
  • a. The accountant owns the working papers and generally may disclose them as the accountant see fit.
  • b. The client owns the working papers bu the accountant as custody of them until the accounts bill is paid in full.
  • c. The accountant owns the working papers but generally may not disclose them without the clients consent or a court order.
  • d. The client owns the working paper but, int he absence of the accountants consent, may not disclose them without a court order.

Question 21

Question
Which of the ff. is an authoritative body designated to promulgate attestation standards?
Answer
  • a. Auditing Standards Board
  • b. Government Accounting Standards Board
  • c. Financial Accountant Standards Board.
  • d. General Accounting Office.

Question 22

Question
According to the profession's standards, which of the following would be considered consulting services?
Answer
  • a. Advisory Services (YES) | Implementation Services (YES) | Product Services (YES)
  • b. Advisory Services (YES) | Implementation Services (YES) | Product Services (no)
  • c. Advisory Services (YES) | Implementation Services (no) | Product Services (YES)
  • d. Advisory Services (no) | Implementation Services (YES) | Product Services (YES)

Question 23

Question
According to the standards of Profession, which of the following events would require a CPA performing a consulting services engagement for a non audit client to draw from the engagement? 1. The CPA has a conflict of Interest that is disclosed to the client and the client consents to the CPA continuing the engagement. 2. The CPA fails to obtain a written understanding from the client concerning the scope of the engagement.
Answer
  • a. 1 only
  • b. 2 Only
  • c. Both 1 & 2
  • d. Neither 1 or 2

Question 24

Question
Which of the ff. services may a CPA perform in carrying out a consulting service for a client? 1. Analysis of the clients accounting system; 2. Review of the clients prepared business plan; 3. Preparation of information for obtaining financing.
Answer
  • a. 1 & 2 only.
  • b. 1 & 3 only
  • c. 2 & 3 only
  • d. 1,2 & 3

Question 25

Question
Under the statements on standards for consulting services, which of the following statements best reflects a CPA's responsibility when undertaking a consulting services engagement? The CPA must:
Answer
  • a. Not seek to modify any agreement made with the client;
  • b. Not perform any attest services for the client;
  • c. Inform the client of significant reservations concerning the benefits of the engagement.
  • d. Obtain a written understanding with the client concerning the time for completion of the engagement.

Question 26

Question
Which of the following services is a CPA generally required to perform when conducting a personal financial planning engagement?
Answer
  • a. Assisting the client to identify tasks that are essential in order to act on planning decisions.
  • b. Assisting the client to take action in planning decisions.
  • c. Monitoring progress in achieving goals.
  • d. Updating recommendations and revising planning decisions.

Question 27

Question
Under the Sabanes- Oxley Act, most audit working papers must be saved:
Answer
  • a. 5 years
  • b. 7 years
  • c. 10 years
  • d. Indefinitely as there is no time limitations provided

Question 28

Question
Passage of the Sarbanes-Oxley act led to the establishment of the:
Answer
  • a. Auditing Standards Board
  • b. Accounting Enforcement Releases Baord
  • c. Public Company Accounting Oversight Board
  • d. Securities and Exchange Commissions

Question 29

Question
Under title II of the Sarbanes-Oxley Act, the auditor of issuer cannot legally perform which type of services for that issuer?
Answer
  • a. Tax Services
  • b. Review of Interim Information
  • c. Internal Audit outsourcing services
  • d. Audit of Internal control over financial reporting

Question 30

Question
The audit partner in charge of an audit of a public company may only:
Answer
  • Be in charge of the audit of that one company
  • Perform the role as long as he or she also performs the "second partner review" for that audit
  • perform that role for five consecutive years
  • perform the role if he or she has proper AICPA issuer accreditation

Question 31

Question
which of the following is correct concerning membership on the Public Company Accounting Oversight Board?
Answer
  • a. Only two of its members may be CPAs.
  • b. It is composed of 9 years.
  • c. All members must also currently be active in public accounting
  • d. A majority of members must be or have been accounting educators.

Question 32

Question
The public company accounting oversights board (PCAOB) is not responsible for standards related to:
Answer
  • Accounting
  • Attestation
  • Auditing
  • Quality Control

Question 33

Question
A PCAOB engagement that focuses on a selected quality control issue is most likely to be referred to as a(n):
Answer
  • Financial Statement Audit
  • Inspection
  • Peer review
  • Quality control

Question 34

Question
Which of the statement below is correct concerning communicating the results of a PCAOB inspection?
Answer
  • The entire report issued by the PCAOB is publicly available
  • The portion of the report issued on a CPA firms quality control is not ordinarily publicly available
  • The report issued is only available to Congress
  • The report is available only to PCAOB members

Question 35

Question
INTERNATIONAL STANDARDS - ETHICAL: In relation to the AICPA code of professional conduct, the IFAC Code of Ethics for Professional Accountants:
Answer
  • Has more outright prohibitions
  • Has fewer outright prohibitions
  • Has no outright prohibitions
  • Applies only to professional accountants in business

Question 36

Question
Based on the IFAC Code of Ethics for Professional Accountants, threat to independence arise from all of the following, except:
Answer
  • Self Interest
  • Advocacy
  • The Audit relationship
  • Intimidation

Question 37

Question
If an audit firm discovers threats to independence with respect to an audit engagement, the IFAC Code of Ethics for Professional Accountants indicates that the firm should:
Answer
  • Immediately resign from the engagement
  • Notify the appropriate regulatory body
  • Document the issue
  • Evaluate the significance of the treats and apply appropriate safeguards to reduce them to an acceptable level.

Question 38

Question
With respect to the acceptance of contingent fees for professional services, the IFAC code of Ethics for Professional Accountants indicates that the accounting firm:
Answer
  • Should not accept contingent fees
  • Should establish appropriate safeguards around acceptance of a contingent fee
  • Should accept contingent fees only for assurance services other than audits of financial statements
  • Should accept contingent fees if it is customary in the country.

Question 39

Question
With regard to marketing professional services, the IFAC Code of Ethics for Professional Accountants indicates that:
Answer
  • Direct marketing is prohibited
  • Marketing is allowed if lawful
  • Marketing should be honest and truthful
  • Marketing of Audit services is prohibited

Question 40

Question
What body established international auditing standards?
Answer
  • a. The Public Company Accounting Oversight Board
  • b. The International Federation of Accountants
  • c. The World Bank
  • d. The International Assurance Body

Question 41

Question
Which of the ff. is not true about International Auditing Standards?
Answer
  • a. IAS do not require an Audit of Internal Control
  • b. IAS do not allow reference to division of responsibilities in the audit report
  • c. IAS require obtaining an attorney's letter
  • d. International auditing standards are based on a risk assessment approach.

Question 42

Question
Which of the following is not true about international auditing standards?
Answer
  • a. Audit report modifications for consistency in the applications of accounting principles is required.
  • b. Confirmation of accounts receivable is not required.
  • c. The location in which the auditor practices must be disclosed in the audit report.
  • d. International Auditing standards do not require an audit of internal control.

Question 43

Question
Independence standards of the GAO for audits in accordance with generally accepted government auditing standards describe three types of impairments of independence. Which of the following is not one of these types of impairments?
Answer
  • a. Personal
  • b. Organizational
  • c. External
  • d. Unusual

Question 44

Question
In accordance with the independence standards of the GAO for performing audits in accordance with generally accepted government auditing standards, which of the following is not an example of an external impairment of independence.
Answer
  • a. Reducing the extent of audit work due to pressure from management to reduce audit fees
  • b. selecting audit items based on the wishes of an employee of the organization being audited.
  • c. Bias in the items the auditors decide to select for testing.
  • d. Influence by management on the personnel assigned to the audit.

Question 45

Question
Under the Independence standards of the GAO for performing audit in accordance with generally accepted government auditing standards, which of the following are over reaching principles for determining whether a nonaudit service impairs independence? 1. Auditor must not perform non audit services that involve performing management functions or making management decisions. 2. Auditors must not audit their own work or provided nonaudit services in situations in which the nonaudit services are significant or material to the subject matter of the audit. 3. Auditors must not perform non audit services which require independence.
Answer
  • 1 only
  • 1 & 2 only
  • 1,2 & 3
  • 2 & 3 only
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