The emphasis on positive activities.
That they identify ideal conduct.
The difficulty of enforcing principles, or general ideals.
That there are too many to remember.
Maintaining an indirect financial interest.
Not being financially dependent on a client.
Taking an unbiased and objective viewpoint.
Being an advocate for a client.
A staff auditor providing audit services to the client acquires stock in that client.
A staff tax preparer who provides 15 hours of non-audit services to the client acquires stock in that client.
An audit manager in an office different than the office providing audit services has a direct, immaterial financial interest in the audit client.
A covered member has an indirect, immaterial financial interest in an audit client.
All partners in an office that has no responsibility for the engagement.
The firm and its employee benefit plans.
Individuals on the attest engagement.
All of the above describe covered members.
The former partner invests in a current client of the firm and receives retirement benefits from the CPA firm, which are dependent upon the firm’s financial performance.
The former partner uses the CPA firm’s office space and has significant influence over a client.
The former partner severs relations with the firm and accepts employment with the firm’s client after having been retired for 18 months.
The former partner is held out as an associate of the firm and takes part in the firm’s business activities.
Relative supported by the CPA.
Sibling living in the same city as the CPA.
A director or officer of an audit client.
An underwriter for the sale of a client’s securities.
A trustee of a client’s pension fund.
An honorary director for a not-for-profit charitable or religious organization.
Allow each firm to determine the answer on a case-by-case basis.
Engagement excluding tax services.
Engagement excluding management advisory services.
The auditor accepts management’s opinion regarding the collection of accounts receivable without an independent evaluation.
In preparing a client’s tax return, the CPA encourages a client to take a deduction which the CPA believes is risky, but unlikely to be found during an IRS audit.
Either a or b would be a violation of the rule.
Neither a nor b would be a violation of the rule.
The CEO is correct and the auditor must maintain confidentiality.
The CEO is incorrect, but because the audit report has been issued it is too late.
The CEO is correct, but to be ethically correct the auditor should violate the confidentiality rule and disclose the error.
The CEO is incorrect, and the auditor has an obligation to issue a revised audit report, even if the CEO will not correct the financial statements.
Preparation of an original tax return.
Preparation of an amended tax return.
Contingent fees based on savings due to implementation of an information system.
Commissions for referring a review client to an insurance agency for insurance coverage.
Preparation of tax returns for which fees are based upon client refunds.
Each of the above is allowed.
|A compilation that will be used by a third party||An audit of prospective financial information|
Whichever rules are less restrictive.
Whichever rules are more restrictive.
The rules of the AICPA.
The rules of the state’s board of accountancy.
Elise cannot be a partner in any separate partnership that offers data processing services.
Elise may form a separate partnership.
Elise may form a separate partnership as long as partners are CPAs.
Elise may form a separate partnership, but must give up the public accounting practice.
Choose independently between alternate accounting principles and auditing standards.
Distinguish between accounting practices that are acceptable and those that are not.
Be unyielding in all matters dealing with auditing procedures.
Maintain an impartial attitude on matters that come under the CPA’s review.
Celebrity endorsement advertising.
Use of trade names, such as “Awesome Auditors.”
Use of phrases, such as “Guaranteed largest tax refunds in town!”
Is a violation of the Code of Professional Conduct.
Is a violation only if Greer and Sawyers are CPAs.
Is a violation only if Jackson & Jackson LLP is a CPA firm.
Is not a violation.
The CPA must not assume a management role or function.
The client must hire an external CPA to approve all of the journal entries prepared by the auditor.
The auditor must comply with GAAS when auditing work prepared by his/her firm.
The client must accept responsibility for the financial statements.
Individuals not on a firm’s board of directors should comprise the audit committee.
The audit committee generally helps in resolving conflicts between the auditors and company management.
All companies listed on the NYSE are required to have an audit committee.
Audit committees are required for all companies.
Rules of Conduct.
|Honor the public trust||Serve the client’s interest|
Should be independent in fact and in appearance at all times.
In public practice should be independent in fact and in appearance at all times.
In public practice should be independent in fact and in appearance when providing auditing and other attestations services.
In public practice should be independent in fact and in appearance when providing auditing, tax, and MAS services.
Principles are enforceable.
Ethical Rulings are enforceable.
Interpretations are enforceable.
Rules of Conduct are enforceable.
Services performed by accountants in public practice.
Accounting and auditing services performed.
Professional work performed by CPAs.
The Interpretations are not enforceable.
The Interpretations are enforceable.
The Interpretations may be enforceable if they have been reviewed and approved by the AICPA’s Division of Professional Ethics.
The Interpretations are not enforceable, but a practitioner must justify departure from them.
Issued by the AICPA’s Board of Governors.
Explanations relating to specific factual circumstances.
Explanations relating to broad hypothetical circumstances.
Rules of Conduct.
In all circumstances.
For non-attestation services.
Except for the single exception of a tax practice.
Unless it is specifically stated otherwise in the Code.
All of the above are examples of indirect ownership.
In all circumstances.
Only for direct ownership.
Only for indirect ownership.
Under no circumstances.
When close relatives such as nondependent children, brothers, and sisters have a significant financial interest in the client.
When close relatives such as nondependent children, brothers, and sisters have any financial interest in the client.
When the CPA owns shares in a mutual fund that has an ownership interest in the client.
When close relatives such as brother, sister, or in-laws are employed by client.
Litigation by a client against an audit firm related to tax services.
Litigation by a client against an audit firm claiming a deficiency in the previous audit.
Litigation by an audit firm against a client claiming management fraud or deceit.
Client’s intent to start a lawsuit at some future date, after the current audit is completed, claiming a deficiency in the previous audit.
The client must accept full responsibility for the financial statements.
The client is required to file an annual report, including audited financial statements, with the Securities and Exchange Commission.
The CPA must not assume the role of employee or of manager.
The CPA must follow applicable auditing standards.
Internal audit outsourcing.
Legal services unrelated to the audit.
Appraisal or valuation services.
Services related to assessing the effectiveness of internal control over financial reporting.
Assisting the company in preparing certain SEC registration statements (e.g., 10-Q, 10-K).
Investment banker services.
Subpoena or summons.
Complaint filed with the trial board of the Institute.
Request by a client’s largest stockholder.
Proprietorships or partnerships only.
Proprietorships, partnerships, or professional corporations.
Proprietorships, general partnerships, general corporations, professional corporations, limited liability companies, and limited liability partnerships if permitted by state law.
Single proprietorships, partnerships, professional corporations if permitted by state law, or regular corporations.
The auditor’s checking account, which is fully insured by a federal agency, is held at a client financial institution.
The auditor is also an attorney who advises the client as its general counsel.
An employee of the auditor serves as treasurer of a charitable organization that is a client.
The client owes the auditor fees for two consecutive annual audits.
Independent because the financial interest is immaterial and, therefore, may issue a review report.
Not independent and, therefore, may not issue a review report.
Not independent and, therefore, may not be associated with the financial statements.
Not independent and, therefore, may issue a review report, but may not issue an auditor’s opinion.
The proposed engagement is not accounting-related.
Recommendations made by the CPA firm are to be subject to review by the client.
Acceptance would require the CPA firm to make management decisions for an audit client.
Any of the above is true.
The CPA is issued a summons enforceable by a court order which orders the CPA to present confidential information.
A major stockholder of a client company seeks accounting information from the CPA after management declined to disclose the requested information.
Confidential client information is made available as part of a quality review of the CPA’s practice by a peer review team authorized by the AICPA.
An inquiry by a disciplinary body of a state CPA society requests confidential client information.
“All other fees”
Scope and Nature of Services.
The Public Interest.
Compliance with standards.
Acts discreditable to the profession.
That have audits performed by AICPA member firms.
That must file 10-K reports with the SEC.
Listed on the New York Stock Exchange.
In all circumstances.
Financial Accounting Standards Board.
Securities and Exchange Commission.
CPA licensing agencies within each state.
Professional Ethics Executive Committee of the AICPA.
Loans fully collateralized by cash deposits at the same financial institution.
Unpaid credit card balances not exceeding $15,000.
Charge fees as an expert witness determined by the amount awarded to the plaintiff, even though the CPA also performs a compilation for client use.
Base consulting fees on a percentage of a bond issue, even though the CPA performs a review of the client’s financial statements.
Base fees for a tax service on the amount of the refund that the client will receive.
Base consulting fees on a percentage of a bond issue, even though CPA performs an audit of the client’s financial statements.
The CPA firm has issued the standard unqualified audit report after auditing a governmental agency, although GAAS was not followed because the government required procedures different from GAAS.
The CPA firm discriminates in its hiring practices based on the age of the applicant.
The CPA retains the client’s books and records to enforce past-due payment of the CPA’s bill, even after the client has demanded they be returned.
The CPA firm’s partner-in-charge was arrested recently on his way home from the firm’s holiday party. He was a passenger in a car driven by his wife and she was charged with “driving while intoxicated.”
The willful failure to file any income tax return that the CPA, as an individual taxpayer, is required by law to file.
The willful filing of a fraudulent income tax return on a client’s behalf.
Conviction of a crime punishable by imprisonment of 6 months.
The willful aiding in the preparation of a false and fraudulent income tax return.
Shareholders in both professional corporations and regular corporations are individually liable in litigation against the CPA firm.
The shareholders, officers, and employees must comply with all Code of Professional Conduct requirements.
Stock in a public accounting corporation must be held by only those CPAs who are qualified to practice.
The firm name must meet the same requirements as those for a single proprietorship and partnership.
Charitable organization in which an employee of the CPA serves as treasurer.
Municipality in which the CPA owns $250,000 of the $2,500,000 indebtedness of the municipality.
Cooperative apartment house in which the CPA owns an apartment and is not part of the management.
Company in which the CPA’s investment club owns a one-tenth interest.
Due professional care.
Planning and supervision.
Sufficient relevant data.
Non-audit services that are not prohibited by Sarbanes-Oxley or the SEC rules must be approved by management of the client.
Non-audit services that are not prohibited by Sarbanes-Oxley or the SEC rules must be approved by staff of the PCAOB.
Non-audit services that are not prohibited by Sarbanes-Oxley or the SEC rules must be approved by staff of the PCAOB and the SEC.
Non-audit services that are not prohibited by Sarbanes-Oxley or the SEC rules must be approved by the company’s audit committee.