Michigan CPA Recertification Ethics
Exam Practice Questions And Correct
Answers (Verified Answers) Plus
Rationale 2026 Q&A| Instant Download
Pdf
1. Which of the following best describes the fundamental principle of
integrity in the AICPA Code of Professional Conduct?
A. Maintaining professional competence through continuing education
B. Performing services with due care and technical accuracy
C. Being honest and candid in all professional and business
relationships
D. Avoiding situations that could impair independence
Integrity requires accountants to be straightforward, honest, and
free from deceit in all professional activities, establishing trust and
credibility.
2. The concept of objectivity in professional accounting requires that a
CPA:
A. Follows client instructions even if unethical
B. Maintains impartiality, intellectual honesty, and freedom from
conflicts of interest
C. Discloses all client information publicly
D. Delegates ethical decision-making to subordinates
Objectivity ensures that professional judgment is not compromised
by bias, conflicts, or undue influence, maintaining the reliability of
accounting services.
3. Independence in fact differs from independence in appearance in that:
A. Both are legally required, but only appearance affects reputation
, B. Independence in fact refers to actual unbiased state of mind;
independence in appearance refers to public perception of
independence
C. Independence in appearance is irrelevant under PCAOB rules
D. Independence in fact applies only to internal audits
A CPA must not only be independent in reality but also avoid
situations that could lead a reasonable observer to question their
independence.
4. A CPA discovers a material error in prior financial statements prepared
for a client. The most appropriate course of action is to:
A. Ignore the error if the client requests
B. Report the error only if an audit is performed next year
C. Communicate the error to those charged with governance and
recommend correction
D. Correct the error secretly without client knowledge
Ethical standards require transparency and professional
responsibility in addressing errors that affect stakeholders’ decisions.
5. A conflict of interest arises when a CPA:
A. Fails to maintain competence in auditing standards
B. Accepts gifts from a vendor unrelated to accounting services
C. Has a personal or financial interest that could influence objectivity
in a professional engagement
D. Provides tax advice in multiple jurisdictions
Conflicts of interest compromise professional judgment, so disclosure
and mitigation are required to preserve integrity and objectivity.
6. Confidential client information may be disclosed by a CPA when:
A. The client explicitly forbids disclosure in writing
B. The information is of minor importance
C. Required by law, such as in response to a subpoena or regulatory
inquiry
D. It benefits the CPA personally
Confidentiality protects clients and enhances trust, but legal
obligations take precedence over private agreements.
7. When performing non-audit services for an audit client, which
safeguard most effectively addresses threats to independence?
, A. Billing separately for services
B. Having the audit partner review and approve all non-audit services
C. Reducing the audit scope
D. Using the same staff for both audit and consulting tasks
Safeguards such as partner review help ensure objectivity is
maintained despite potential conflicts of interest.
8. Which of the following is considered a self-review threat under the
AICPA Code of Professional Conduct?
A. Accepting gifts from a client
B. Auditing financial statements that include accounting estimates
the CPA previously prepared
C. Participating in a competitor’s audit
D. Discussing financial results with management
A self-review threat occurs when a CPA reviews their own work,
impairing objectivity and independence.
9. The principle of due care requires that a CPA:
A. Avoids challenging tasks
B. Performs professional services with competence, diligence, and in
accordance with applicable standards
C. Delegates all responsibilities to junior staff
D. Focuses solely on financial gain
Due care ensures that CPAs provide services responsibly, with
appropriate technical skill, attention, and ethical consideration.
10. A CPA faces pressure from a client to misstate financial results.
The most ethical response is to:
A. Comply quietly to retain the client
B. Refuse to comply and consider withdrawing from the engagement
C. Modify only minor amounts to satisfy the client
D. Seek to justify the misstatement in notes
Professional ethics prohibit compromising integrity; withdrawal may
be necessary to avoid participating in fraud or misleading
statements.
11. Which action demonstrates a threat of familiarity in auditing?
A. Performing an audit on an unfamiliar client
B. Auditing a close friend’s company
Exam Practice Questions And Correct
Answers (Verified Answers) Plus
Rationale 2026 Q&A| Instant Download
1. Which of the following best describes the fundamental principle of
integrity in the AICPA Code of Professional Conduct?
A. Maintaining professional competence through continuing education
B. Performing services with due care and technical accuracy
C. Being honest and candid in all professional and business
relationships
D. Avoiding situations that could impair independence
Integrity requires accountants to be straightforward, honest, and
free from deceit in all professional activities, establishing trust and
credibility.
2. The concept of objectivity in professional accounting requires that a
CPA:
A. Follows client instructions even if unethical
B. Maintains impartiality, intellectual honesty, and freedom from
conflicts of interest
C. Discloses all client information publicly
D. Delegates ethical decision-making to subordinates
Objectivity ensures that professional judgment is not compromised
by bias, conflicts, or undue influence, maintaining the reliability of
accounting services.
3. Independence in fact differs from independence in appearance in that:
A. Both are legally required, but only appearance affects reputation
, B. Independence in fact refers to actual unbiased state of mind;
independence in appearance refers to public perception of
independence
C. Independence in appearance is irrelevant under PCAOB rules
D. Independence in fact applies only to internal audits
A CPA must not only be independent in reality but also avoid
situations that could lead a reasonable observer to question their
independence.
4. A CPA discovers a material error in prior financial statements prepared
for a client. The most appropriate course of action is to:
A. Ignore the error if the client requests
B. Report the error only if an audit is performed next year
C. Communicate the error to those charged with governance and
recommend correction
D. Correct the error secretly without client knowledge
Ethical standards require transparency and professional
responsibility in addressing errors that affect stakeholders’ decisions.
5. A conflict of interest arises when a CPA:
A. Fails to maintain competence in auditing standards
B. Accepts gifts from a vendor unrelated to accounting services
C. Has a personal or financial interest that could influence objectivity
in a professional engagement
D. Provides tax advice in multiple jurisdictions
Conflicts of interest compromise professional judgment, so disclosure
and mitigation are required to preserve integrity and objectivity.
6. Confidential client information may be disclosed by a CPA when:
A. The client explicitly forbids disclosure in writing
B. The information is of minor importance
C. Required by law, such as in response to a subpoena or regulatory
inquiry
D. It benefits the CPA personally
Confidentiality protects clients and enhances trust, but legal
obligations take precedence over private agreements.
7. When performing non-audit services for an audit client, which
safeguard most effectively addresses threats to independence?
, A. Billing separately for services
B. Having the audit partner review and approve all non-audit services
C. Reducing the audit scope
D. Using the same staff for both audit and consulting tasks
Safeguards such as partner review help ensure objectivity is
maintained despite potential conflicts of interest.
8. Which of the following is considered a self-review threat under the
AICPA Code of Professional Conduct?
A. Accepting gifts from a client
B. Auditing financial statements that include accounting estimates
the CPA previously prepared
C. Participating in a competitor’s audit
D. Discussing financial results with management
A self-review threat occurs when a CPA reviews their own work,
impairing objectivity and independence.
9. The principle of due care requires that a CPA:
A. Avoids challenging tasks
B. Performs professional services with competence, diligence, and in
accordance with applicable standards
C. Delegates all responsibilities to junior staff
D. Focuses solely on financial gain
Due care ensures that CPAs provide services responsibly, with
appropriate technical skill, attention, and ethical consideration.
10. A CPA faces pressure from a client to misstate financial results.
The most ethical response is to:
A. Comply quietly to retain the client
B. Refuse to comply and consider withdrawing from the engagement
C. Modify only minor amounts to satisfy the client
D. Seek to justify the misstatement in notes
Professional ethics prohibit compromising integrity; withdrawal may
be necessary to avoid participating in fraud or misleading
statements.
11. Which action demonstrates a threat of familiarity in auditing?
A. Performing an audit on an unfamiliar client
B. Auditing a close friend’s company
