Question 1

Match each term below with its definition as provided by the AICPA Rules of Conduct.

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Question 2

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?

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Question 3

Why do professions establish codes of conduct that define ethical behaviors for members of the profession?

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Question 4

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

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Question 5

Listed below are definitions of the six Principles of Professional Conduct.For each,identify the principle being defined.
a.A member should observe the profession's technical and ethical standards,strive continually to improve competence and the quality of services,and discharge professional responsibility to the best of the member's ability.
b.Members should exercise sensitive professional and moral judgments in all their activities.
c.A member should be free of conflicts of interest in discharging professional responsibilities.
d.A member in public practice should observe the Principles of the Code of Professional Conduct in determining the type and extent of services to be provided.
e.Members should accept the obligation to act in a way that will honor the public trust and demonstrate commitment to professionalism.
f.To maintain and broaden public confidence,members should perform all professional responsibilities with the highest sense of _____________.

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Question 6

According to the profession's ethical standards,a CPA would be considered independent in which of the following instances?

Accepted Answer

Belonging to a country club client with an annual fee does not impair independence as it is considered a normal business relationship and does not involve a financial interest that would affect the CPA's objectivity.

Question 7

When auditing a public company,which of the following impairs an auditor's independence?

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Question 8

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

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Question 9

Identify the primary purposes of the General Standards Rule,the Compliance with Standards Rule and the Accounting Principles Rule of the Rules of Conduct.

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Question 10

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

Serving as legal agent and consummating a business acquisition for the client creates a conflict of interest and impairs independence. The other options describe situations where independence may not necessarily be impaired.

Question 11

Ms.Lembke is a partner for DTS,a CPA firm.She is the lead partner for the firm's largest client,The Grey Elephant.Ms.Zadina,who works in the same office as Ms.Lembke,has a sister who is the controller for The Grey Elephant.Because of potential independence issues,Ms.Zadina does no work for The Grey Elephant.Ms.Zadina is being considered for promotion to partner.What independence issues should Ms.Lembke consider before promoting Ms.Zadina?

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Question 12

Which professional and regulatory bodies establish the ethical and professional rules for auditors of: (1)public companies and (2)private companies?

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Quiz 19: Professsional Conduct,Independence,and Quality Control