AICPA Ethics Code Exam(2022/2023)Questions And Answers.

Which step in the decision-making model is characterized by asking the question, "Are these opinions consistent with applicable professional ethics rules, regulations, and laws?" A. Recognize ethical issues B. Gather critical facts C. Consider the effect on stakeholders D. Consider rules, regulations, and laws D. Consider rules, regulations, and laws Step 7 asks this question. You may determine that the greatest benefit and least amount of harm would likely result if you take a particular course of action, but if that course of action is inconsistent with the profession's rules of conduct, you may not ignore those rules. Which step in the decision-making model is characterized by asking the question, "If you had to discuss your decision in public, would you be concerned about how it reflects on your ethics" A. Recognize ethical issues B. Consider your comfort level C. Consider the effect on stake holders D. Consider rules, regulations, and laws B. Consider your comfort level Step 6 asks you to consider your comfort level. Before you make a decision about the correct action when facing an ethical issue, you should ask yourself some questions. CPAs must follow the rules and standards promulgated by which body? A. AICPA B. SEC C. PCAOB D. Your state CPA licensing board D. Your state CPA licensing board State CPA licensing boards are charged with issuing CPA licenses and overseeing the ethical conduct of CPAs in 55 jurisdictions in the United States. It is critically important for CPAs to know their state board's requirements. If you are licensed by more than one state board, you should familiarize yourself with each state's requirements. As a professional CPA, I have the greatest responsibility to serve: A. My clients B. My best interest C. The public's interest D. My superior's interest C. Your primary responsibility is to serve the public interest. As a professional CPA, I have a responsibility to maintain and broaden public confidence by performing all my responsibilities with: A. Integrity B. Speed C. Agility D. Perfection A. Integrity Integrity is one of the cornerstones of our profession. I also must maintain my objectivity, be free of conflicts of interest, and discharge all of my responsibilities with due... A. Respect B. Care C. Diligence D. Speed B. Care Due care implies a certain level of quality and competence in the performance of services. Bob is a CPA who works as as senior accountant in a small but diversified financial services company. Bob works for the parent company (bank) in a division that makes business loans. His mother has been offered a seat on the board of directors of a subsidiary company that is an investment advisor. Does Bob's situation cause a significant threat to Bob's integrity and objectivity (conflict of interest)? A. No. The bank and investment advisory firm are separate and distinct businesses B. Yes. Directorships of relatives always result in conflicts of interest C. Maybe. But more facts should be considered C. Maybe. But more facts should be considered We need more information to determine whether this situation creates a significant threat to Bob's ability to be objective. Which factor must be in place for you to perform services in light of a potential conflict of interest? A. The affected parties have agreed to bring the matter to the BOD B. The affected parties have agreed not to sue you or your firm C. You have determined that your threats to objectivity are at an acceptable level D. You have determined that some third parties might not question your objectivity C. You have determined that your threats to objectivity are at an acceptable level To proceed with evaluating your potential conflict of interest, you must conclude that you can provide the services objectively (that is, threats to you objectivity are insignificant or have been reduced to an acceptable level). Suppose a statute exists in your state that allows you to place a lien on client records in the event of unpaid fees. Given these facts are you obligated to return the client's records? A. No, not until he pays the $5,000 he owes you B. Yes, these records should be provided upon request B. Yes, these records should be provided upon request The code requires you to return client provided records under all circumstances. As part of your work, you prepared several schedules relating to the client's investment trading activity. He now says he needs those schedules so that he can complete his tax return himself. Are you required to return those records? A. No, these are not considered client-provided records B. Yes, schedules that you prepare are conspired client provided records A. No, these are not considered client-provided records Your work papers, including analyses and schedules prepared by the client at your request, are your property, not client provided records. You are receiving requests from all the LPs asking that they receive copies if the partnership records. They claim the GP refused to furnish these records and referred all inquiries to you. Are you required to furnish these to all LPs that ask? A. No, since they are not the client representative B. Yes, because they have a legitimate need for them A. No, since they are not the client representative The code generally requires you to return client records once to the client's representative. After you have delivered them to the GP (client's representative), you need not comply with subsequent requests to again provide this information, so that the information does not get into the wrong hands. However, if as a result of a natural disaster or act of war, the client (GP) loses records that you had previously provided to him/her, you should honor this request. Alf & Company, CPAs decides to subcontract a portion of its tax return preparation work to Dee Howard (DH) Tax Preparation Services, an unaffiliated income tax service provider. What does Alf & Company need to do to outsource the tax work? I Ensure that DH is current in its income tax obligations II. Ensure that DH has appropriate controls in place to protect the confidentiality of the client data III. Disclose to the client that services may be performed by DH IV. Have a contractual agreement with DH to protect the confidentiality of client information A. I, II, and III are required B. II, III, and IV are required C. III and IV are required D . All of the items are required B. II, III, and IV are required The firm needs to take certain steps to protect client confidentiality, including a contractual agreement, and to inform the client that a third-party service provider may be used. Hana is the controller of a large sporting goods store. Her boss instructs her to materially increase the company's inventory balance by crediting "other expenses." She doesn't understand why, but tells her staff to. book the journal entry. What statement best describes Hana's actions? A. Hana failed to evaluate a potential ethical issue by subordinating her judgement B. Hana failed to refer the matter to the AICPA ethics hotline C. Hana failed to ensure that her staff was competent to make the entry D. Hana failed to consider the rules of other regulators A. Hana failed to evaluate a potential ethical issue by subordinating her judgment She is subordinating her judgement by not following up and asking her boss why he wants her to book this journal entry. This could be a material misstatement of the financial statements, especially considering the boss wants to use "other expenses" instead to a more specific account. Just because her boss tells her to do something, doesn't mean you should assume it's correct or ethical, and Hana will still be held accountable as the controller if it is improper. She should have evaluated the potential ethical issue. The other answer choices don't best describe the problem because there was no mention about her failing to use a hotline, ensuring competency of her staff, or not considering rules. Hana receives tickets to Hamilton from one of her company's largest vendors. The gift included a card that congratulated her on a recent promotion. In determining whether accepting the gift would create a significant threat to her compliance with the AICPA code, what factor should she most consider? A. Whether she disclosed the receipt of the gift to the board of directors B. Whether she truly earned the gift C. Whether the gift is reasonable in the circumstances D. Whether the tickets cost more than $100 C. Whether the gift is reasonable in the circumstances The key thing we learned about the ethics of receiving gifts as CPAs is whether the gift was reasonable in the circumstances. By reasonable, would the gift impact our judgement in the future or cause us to give that vendor special treatment? If the vendor pays for a dinner to discuss business that's one thing (probably reasonable), but if it's something that would cause your objectivity to be impaired, then you shouldn't accept the gift. It could be a $5 or $500 gift, but if you feel like you now "owe" the vendor something in return, you should decline the gift.