Interpretations of the aicpa code of professional conduct are dominated by the concept of:

Study online at quizlet.com/_tvcqe ... The AICPA's Code of Professional Conduct states that a .... False all attestation...

Audit Ch 4 Study online at quizlet.com/_tvcqe 1.  According

to the Princi Principles ples section of the Code of

14.

Professional Conduct, a ll members:: members:: in public practice should sho uld be indepe independent ndent in fact and in appearance when prov providing iding auditing and an d other attestations attestations s erv ervices. ices. 2.  According

3.

statement or annual statement a nnual filings wi th the SEC the total total amount of audit and non-audit fees paid to the audit firm for the two most recent years. Whic h of the following is not one of the categories of fees that must be disclosed?: consulting fees

to the profession's ethical standards, an

audi tor would be considered ind ependent in which of  the following following instances?: insta nces?: The auditor's checking account,  whi ch is fully ins ure ured d by by a federal federal agency, is held at a client financial institution.

15.  A

4.  An

16.

17.

advantage of of specific rules in the Code Code of of Professiona Professionall

6.

18.

The AICPA's Code of Professional Conduct ________ a

The AICPA's Code of Professional Conduct requires

19.

The AICPA's Code of Professional Conduct states that a CPA should maintai n integrity and objectivity. The term term "objectivity" in the Code refers refers to a CPA's ability to:: maintain an impart impartial ial attitu attitude de on matters that come under the CPA's review.

9.

20.

app rove all all non-audit services p rovided by the company's financial statement auditor.: True audi tor's independence is considered auditor's consid ered impaired if

21.

Charley Ray, CPA, is a member of the engagement team that performs the audit of Desir ee Corporation. Charley's five-year-old daughter, Becky, received ten shares of Desir ee common common stock for for her fifth bi rthday  in a trust fund established by Becky's Becky's grandmother.: grandmother.: IS a  violation; 101 Indep Independence endence

12.

13.

22.

The Code of Professiona Professionall Conduct is established by the membership of the AICPA, and the Interpretations of  membership the Rules Rules of Conduct are p repared by the:: Professional Ethics Executive Committee of the AICPA.

For which of the follow following ing pr ofessional services must CPAs be independent?: Audit independent?:  Auditss of finan cial s tatem tatements. ents.

23.

Four of the six Ethical Prin ciples in the AICPA's Code of  of  Professional Conduct a re equally equally app licable to all members of the AICPA. Which of the following principles applies only to members in public practice?: Scope and Nature of Services

The Code of Conduct Conduct rule on independence indi cates that materiality must be considered when:: Evaluating indirect ownershi p; NOT evaluating direct investment investmentss made by  the CPA

Financial Finan cial interests family members members of a CPA ca n affect the CPA's independence. Which of the following following parti es  would not not be included as a "di rect financial interest" of  the CPA?: Sibling living in the same city as the CPA

the auditor has:: a joint, closely held business investment  with the client that is material material to the auditor's auditor's net worth. 11.

Ethical Rulings are: I. Explanations r el elating ating to broad hypothetical circumstances. II. Not enforceable, enforceable, but one must ju stify depar ture. III. Explanations relating to specific factual circumstances.: II and III

The audit audi t committee of a private pr ivate company need not

10.  An

Ethical rulings: These are explana tions by the executive executive committee of the committee the professional ethics division of specific factual circumstances; circumst ances; are not enforceable, but a practitioner must must justify  any departure.

independence for all:: attestation engagements. 8.

Elaine Cooper Cooper CPA, is the au ditor of Paula's Piz za. Towards the end of the audit, Pa ula gave Elaine Elaine her estimate of receivable collectability and Elaine accepted it without further cooperation.: IS a violation; 102Integrity and Objectivit Objectivity  y

CPA firm from doing both bookkee bookkeepin ping g and aud iting services for the same public company client?: prohibits 7.

CPAs may pr ovide bookkee bookkeeping ping services s ervices to their nonpublic audit au dit clients, but there are a number of  conditions that must be met if the auditor is to maintain independence. Which of the following following conditions i s not necessary?: The client must hire an external CPA to approve approve all of the journal entries prepared by the auditor.

advantage of of the pri princip nciple les s of professiona professionall conduct conduct in

the Code of Professiona Professionall Conduct is that they are more easily enforced enforced than are the specific rules of conduct.: False

CPAs are prohibited p rohibited from which of the follow following ing forms of advertising?: Use of phrases, such as "Guaranteed largest tax refunds in town!"

Conduct is the enforceability enforceability of minimum behavior and performance standards.: True 5.  An

CPA firm firm should decline an offer offer to perform perform

consulting services engag engageme ement nt if:: i f:: acceptance would require requ ire the CPA firm to make manag ement decisions decisions for an audit client.

The accounting firm of F ine & Herman, CPAs, provides  bookkeeping  bookkee ping and tax services for Henderson Corporation, a p rivately held held company. Mr. Herman also performs the annual audi t of Henderson Henderson Corporation.: IS NOT a violation- 101 Independence

Companies are required to disclose in their pr oxy

24.

Freeman and Johnson formed a successful CPA practice ten years years ago. a go. In 20x4, they they approached app roached Adam Sawtooth, Sawtoo th, a surgeo sur geon n and medical expert, and as ked him to assist assis t them with their growing medica medicall consulting practi ce. Sawtooth Sawtooth agreed, but only after he was given an ownership interest in the firm. Sawtooth does does intend to reduce his private practice hours and spend 40% of  his working hours d evo evoted ted to the Freeman & Johnson practice.: IS a violation; 505- Form of Organization & Name

25.

Identify the four par ts to the AICPA's Code of

38.

Professional Conduct: Principles, rules of conduct, interpretations, and ethical rulings 26.

"Independence" in auditing means:: taking an unbiased

interpretations of rules are more specific than ethica l rulings.: False 39.

and objective viewpoint 27.

Independence is r equired of a CPA when performing:: The Independence Standards Board was formed to provide a conceptual framework for independence issues related to audits of public companies.: True

29.

40.

In some situa tions, the interpretations of the Rules of  Conduct permit former partners to have relationships  with a client of the firm without affecting the firm's independence. Which of the following situations would cause a loss of independence? I. The former partner uses the CPA firm's office space and has signifi cant influence over a client. II. The former partner s evers relations with the firm and accepts employment with the fi rm's client after having been retired for 18 months. III. The former partner is h eld out as an associ ate of the firm and takes part in the firm's business activities.: II and III

31.

32.

34.

42.

43.

44.  A

allow an aud itor to serve as:: an h onorary director for a notfor-profit charitable or religious organization 36.

45.

37.

In the AICPA Code of Professional Conduct, ethica l rulings are less specific than rules of conduct.: False

The members of a client's "audit committee" should be:: directors wh o are not a part of company mana gement.

46.

Non-CPA members of a firm with AICPA membership are not eligible for membership within the AI CPA and therefore do not have to follow the AIPCA Code of  Professional Conduct.: False

47.

Oehlers, CPA, is a staff auditor participating in the engagement of Capital Tru st, Inc. W hich of the following circumstances impairs Oehlers independence?: Oehlers sister is an internal auditor employed part-time by Capital Trust.

48.

Of the four par ts of the AICPA's Code of Professional Conduct, which pa rt is enforceable?: Rules of Conduct

49.

Interpretations to the Rules of Conduct permit a CPA  firm to do both bookkeeping and auditing for the same client if three criteria are met. Which of the following is not one of those criteria?: The client is required to file an annual report, including audited financial statements, with the Securities and Exchange Commission.

member firm of the AICPA is not only responsible for

its compliance with the Rules of Conduct, but it i s also responsible for compliance by its:: employees an d shareholders

Interpretations of the AICPA Code of Professional Interpretations of the rules regardi ng independence

Margaret Henry is a partner i n the Tupelo office of  Jenkins & Thorn, CPAs. Margaret's father is the controller at Markri ch Sporting Supp lies, Inc., a publicly held company in Tupelo. Markrich i s one of  Jenkins & Thorn's audi t clients. Margaret is not involved in the audit of Markrich.: IS a violation; 101 Independence

Conduct are domina ted by the concept of:: independence 35.

Julie and Lisa are sisters. Julie is a CPA auditing the company where Lisa works. Julie's independence is impaired if:: Lisa is the controller

Interpretations of ru les of conduct i n the Code of  Professional Conduct a re not offici ally enforceable and practitioners need not justify depar ture from them.: False

Jason Alexander i s an a udit manager with Reese & Co., CPAs. Jason owns 100 shar es of common stock in one of  the firm's audi t clients, but he does not provide any  audit or non-audit services to the company.: IS NOT a  violation, rule 101- Independence

Interpretations of In dependence Rule 101 prohibit covered members from owning any stock or other di rect investment in a udit clients. Covered members would include which of the following?: All partners in the engag ement office even if they have no engag ement responsibility; Individuals on the a ttest engag ement; The firm and its employee benefit plans

33.

41.

Interpretations: Interpretations of rules are intended to clarify  the rules of co nduct when there are questions from practitioners about a specific rule; are not officia lly enforceable, but a practitioner must justify any departure.

In the AICPA Code of Professional Conduct, the si xth principle of professional conduct, entitled "Scope and Nature of Services," app lies to members of the AICPA   who work in public practice, business, government, or education.: False

In determining independence with respect to any audit engagement, the ultimate decisi on as to whether or not the auditor i s independent must be made by the:: auditor

30.

In the AICPA Code of Professional Conduct, the second principle of professional conduct, entitled "The Public Interest," app lies only to members of the AICPA in public pr actice and not to members who work as accountants i n business, government, or education.: False

all attestation services 28.

In the AICPA Code of Professional Conduct,

One of the AICPA's Ethical Princip les deals with the public interest. It states that members should accept the obligation to act i n a way that wi ll:: Honor the public interest, NOT serve the client's in terest

50.

Principles: These establish ideal standards of ethical conduct stated in philosophical terms; not officially enforceable.

51.

The provisions of the Sarbanes-Oxley Act of 2002 are most likely to allow which of the following non-audit services for audit clients?: tax consulting

52.  A

public company may purchase internal audit services

65.

from their financi al statement audi tor if they are app roved by the company's au dit committee.: False 53.

issued, the auditor discovers the financial statements  were materially misstated. The client's CEO agrees that there are miss tatements, but refuses to correct them. She claims that "confidentiality" p revents the CPA from informing anyone.: The CEO is incorrect, and the auditor has an obligation to issue a revised audit report, even if the CEO will not correct the fina ncial statements.

Rule 101, Independence, prohibits a CPA from performing both audit s ervices and bookkeeping services for the same public company i n the same year.: True

54.

55.

Rule 201 - General Standar ds requires members to comply with certain standards and interpretations.  Which of the following is not a standar d specifica lly  addressed in Rule 201?: professional integrity

66.

Rule 301 of the AICPA's Code of Professional Conduct

67.

requires CPAs to maintai n the confidentiality of client information. This rule would be violated if a CPA  disclosed information without a client's consent as a result of a:: request by a client's largest stockholder. 56.

58.

68.

permits CPA firms to organize as:: proprietorships, general partnerships, general corporations, professional corporations, limited liability companies, a nd limited liability partnerships if  permitted by state law  59.

Rules of conduct: These are the minimum standards of ethical conduct stated as explicit rules that must be followed by every  CPA in the practice of public accounting; are officially  enforceable

60.

61.

Salley Preen has a successful compu ter network

firm may use any name as long as it is not misleading.: True 70.  When

CPAs are able to maintai n their actual

independence, it is referred to as independence in:: Fact 71.  When

determining whether independence is impai red

 because of an ownership i nterest in a client company, materiality will affect ownership:: only for in direct ownership 72.  Which

74.  Which

The Sarbanes-Oxley Act permits the audi tor to perform

The Sarbanes-Oxley Act requires a cooling off period of

The Sarbanes-Oxley Act requires which employees of an accounting firm to rotate off the engagement every five  years?: Partner responsible for conc urring viewpoint; NOT incharge auditor

of the following activities is allowed for a CPA

firm's attestation clients?: Contingent fees based on savings due to implementation of an information s ystem.

The Sarbanes-Oxley Act does not require audit

 ________ before a member of an audit team can work  for a client in a key management positi on?: eighteen months 64.

Under Rule 505, Form of Organization and Na me, a CPA

73.  Which

a wide variety of non-audit services for au dit clients.: False 63.

69.

consulting busi ness. Sally has recommended one of her clients to Sam Walton, CPA. To show gratitude for the referral, Sam has agreed to pay Sally a token gift of $50. Sam has not di sclosed the payment arrangement to his new clients.: IS a violation; 503- Commission and Referal Fees committee app roval of all non-audit services pr ior to their performance by the company's external audi tor.: False 62.

Under Rule 301, Confidential Client Information, permissi on is not required fr om the client to use the audit documentation relating to that client during an  AICPA-authorized peer review program with another CPA firm.: True

Rule 505, Form of Organization and Name, prohibits

Rule 505 of the AICPA's Code of Professional Conduct

Under Rule 101, Independence, independence is considered to be impaired if fees remain unpaid for professional services provid ed more than six months  before the date of the current year's report.: False

Rule 502, Advertisi ng and Other F orms of Solicitation,

CPA firms from practicing as limited liability  partnerships.: False

The underlying reason for a code of professional conduct for any profession is: the need for public confidence in the quality of s ervice of the profession.

prohibits members of the AICPA in public pra ctice from performing comparative advertising.: False 57.

Several months after an unqualified audit report was

of the following is(are) true concerning the

Ethical Princi ples of the Code of Professional Conduct? I. They identify ideal conduct. II. They are general ideals and difficu lt to enforce.: I and II of the following is not one of the four parts of the

 AICPA's Code of Professional Conduct?: Definitions (are parts: Principles, Rules of Conduct, Interpretations) 75.  Which

of the following services are allowed by the SEC

 whenever a CPA also audits the company?: Services related to assessing the effectiveness of internal control over financial reporting. 76.  Which

of the following services is not prohibited by the

SEC whenever a CPA also aud its the compan y?: assisting the company in preparing certain SEC registration s tatements (e.g., 10-Q, 10-K) 77.  Which

of the following statements are true with respect

to audit committees? I. One member has to be a fina ncial expert. II. Audi t committees are required for all compani es. III. Outside member of the board of dir ectors should comprise the aud it committee.: II and III

78.  Which

of the following statements best describes the enforceability of the Interpretations of the Rules of Conduct?: The

Interpretations are not enforceable, but a practitioner must justify departure from them. 79.  Which

of the following statements is correct regarding non-audit services that are not prohibited by Sarbanes-Oxley or

SEC?: They must be approved by the company's audit committee. 80.  Which

of the following statements is true? The CPA firm will lose its independence if:: a staff auditor providing audit services

to the client acquires stock in tha t client. 81.  Which

of the following statements is true when the CPA has been engaged to perform an audit of financia l statements?:

The CPA firm is eng aged and paid by the client, but the primary beneficiaries of the audit are those w ho rely on the fina ncial statements.

What are the principles of the aicpa code of professional conduct?

What are the three components of the aicpa code of conduct?

What does the integrity principle of the aicpa Code of Professional Conduct address?

What is the underlying reason for the Code of professional ethics?