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Question(s) / Instruction(s):

21.
medium     The AICPA’s Code of Professional Conduct states that a CPA should maintain integrity and objectivity. The term “objectivity” in the Code refers to a CPA’s ability
     a.     to choose independently between alternate accounting principles and auditing standards.
     b.     to distinguish independently between accounting practices that are acceptable and those that are not.
     c.     to be unyielding in all matters dealing with auditing procedures.
     d.     to maintain an impartial attitude on all matters that come under the CPA’s review.
     
22.
medium     Which of the following is required for a firm to designate itself “Member of the American Institute of Certified Public Accountants” on its letterhead?
     a.     At least one of the partners must be a member of the AICPA.
     b.     The partners whose names appear in the firm name must be members of the AICPA.
     c.     All partners must be members of the AICPA.
     d.     A majority of the partners must be members of the AICPA.
     
23.     CPAs are prohibited from which of the following forms of advertising?
medium     a.     Self-laudatory advertising.
     b.     Celebrity endorsement advertising.
     c.     Use of trade names, such as “Awesome Auditors.”
     d.     Use of phrases, such as “Guaranteed largest tax refunds in town!”
     
24.
medium
     CPAs may provide bookkeeping services to their non-public audit clients, but there are a number of conditions that must be met if the auditor is to maintain his/her independence. Which of the following conditions is not necessary?
     a.     The CPA must not assume a management role or function.
     b.     The client must hire an external CPA to approve all of the journal entries prepared by the auditor.
     c.     The auditor must comply with GAAS when auditing work prepared by his/her firm.
     d.     The client must accept responsibility for the financial statements.
     
25.     Which of the following statements is incorrect with respect to audit committees?
medium     a.     An audit committee should be comprised of outside members of the board of directors.
     b.     The audit committee generally helps in resolving conflicts between the auditors and company management.
     c.     All companies listed on the NYSE are required to have an audit committee.
     d.     Audit committees are required for all companies.
     
26.     To emphasize auditor independence from management, many corporations
medium
     a.     appoint a partner of the CPA firm conducting the examination to the corporation’s audit committee.
     b.     establish a policy of discouraging social contact between employees of the corporation and the staff of the independent auditor.
     c.     have the independent auditor report to an audit committee of outside members of the board of directors.
     d.     request that a representative of the independent auditor be on hand at the annual stockholders’ meeting.
     

27.
medium     Which of the following statements is true when the CPA has been engaged to do an attestation engagement?
     a.     The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client.
     b.     The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are the statement users.
     c.     Should a situation arise where there is no convincing authoritative standard available, and there is a choice of actions which could impact client’s financial statements either positively or negatively, the CPA is free to endorse the choice which is in the client’s interests.
     d.     As long as CPA firms are competent, it is not required that they remain unbiased.
     
28.
medium     In a code of conduct, the advantage of general statements of ideal conduct, as opposed to specific rules of behavior, is
     a.     the emphasis on positive activities.
     b.     the ability to enforce the ideals.
     c.     the enforceability of minimum behavior and performance standards.
     d.     the tendency to define the rules as maximum rather than minimum standards.
     
29.
medium     Which of the following is not one of the four parts of the AICPA’s Code of Professional Conduct?
     a.     Depositions.
     b.     Rules of Conduct.
     c.     Interpretations.
     d.     Principles.
     
30.
medium     One of the AICPA’s Ethical Principles deals with the public interest. It states that members should accept the obligation to act in a way that will
     a.     serve the public interest.
     b.     honor the public trust.
     c.     demonstrate commitment to professionalism.
     d.     do all of the above.
     
31.     According to the Principles section of the Code of Professional Conduct,
medium     a.     all members should be independent in fact and in appearance at all times.
     b.     all members in public practice should be independent in fact and in appearance at all times.
     c.     all members in public practice should be independent in fact and in appearance when providing auditing and other attestation services.
     d.     all members in public practice should be independent in fact and in appearance when providing auditing, tax, and MAS services.
     
32.     Of the various parts of the AICPA’s Code of Professional Conduct,
medium     a.     the Principles are enforceable.
     b.     the Ethical Rulings are enforceable.
     c.     the Interpretations are enforceable.
     d.     the Rules of Conduct are enforceable.
     
33.
medium     Which of the following statements best describes the enforceability of the Interpretations of the Rules of Conduct?
     a.     The Interpretations are not enforceable.
     b.     The Interpretations are enforceable.
     c.     The Interpretations may be enforceable if they have been reviewed and approved by the AICPA’s Division of Professional Ethics.
     d.     The Interpretations are not enforceable, but a practitioner must justify departure.
     
34.     Of the four parts of the AICPA’s Code of Professional Conduct, which part is enforceable?
medium     a.     Ethical Rulings.
     b.     Rules of Conduct.
     c.     Principles.
     d.     Interpretations.
     
35.     Ethical Rulings
medium     a.     are issued by the AICPA’s Board of Governors.
     b.     are explanations relating to specific factual circumstances.
     c.     are explanations relating to broad hypothetical circumstances.
     d.     are enforceable.
     
36.     The AICPA’s Code of Professional Conduct requires independence for
medium     a.     attestation engagements only.
     b.     all services performed by accountants in public practice.
     c.     all accounting and auditing services performed.
     d.     all professional work performed by CPAs.
     
37.
medium
     The Rules of Conduct contained in the AICPA’s Code of Professional Conduct apply to all AICPA members for all services provided, whether or not the member is in the practice of public accounting,
     a.     in all circumstances.
     b.     for non-attestation services.
     c.     except for the single exception of a tax practice.
     d.     unless it is specifically stated otherwise in the Code.
     
38.
medium     A member firm of the AICPA is not only responsible itself for compliance with the Rules of Conduct, but also responsible for compliance by
     a.     employees.
     b.     partners.
     c.     shareholders.
     d.     all of the above.
     
39.
medium
     Although it is possible to take the extreme position that anything affecting either independence in fact or in appearance must be eliminated to ensure a high level of respect in the community, the difficulty with this position is that it is likely to restrict significantly
     a.     the services offered to clients.
     b.     the freedom of CPAs to practice in the traditional manner.
     c.     the ability of CPA firms to hire competent staff.
     d.     all three of the above.
     
40.
medium     An example of an “indirect ownership interest in a client” would be ownership of a client’s stock by a member’s
     a.     dependent child.
     b.     spouse.
     c.     non-dependent grandfather.
     d.     All of the above are examples of indirect ownership.

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