Chapter 4 - AICPA Code of Conduct (Qs & As)
Professional judgment is influenced by... Correct Ans - personal
behavioral traits (attitudes, ethical values, etc.)
Links:
a. The AICPA code of conduct links ________ to ________
b. Personal values and virtues link _______ to _________ Correct Ans -
a. Code links exercising moral judgements to professional conduct
b. Values link ethical sensitivity to judgement
Ethical awareness of an ethical dilemma is a... Correct Ans - a
mediator of the personal factors and ethical judgment relationship.
KPMG Professional Judgment Framework:
What is judgement? When does it occur? Correct Ans - - the process
of reaching a decision or drawing a conclusion where there are a number of
possible alternative solutions.
- Judgment occurs in a setting of uncertainty, risk, and often conflicts of
interest.
5 Components of the KPMG Professional Judgment Framework Correct
Ans - 1. Clarify issues and objectives.
2. Consider alternatives.
3. Gather and evaluate information.
4. Reach conclusion.
5. Articulate and document rationale.
KPMG Professional Judgment Framework:
What type of framework is it? Explain. Correct Ans - - Prescriptive
framework: in the real world, pressures, time constraints, and limited
capacity may cause deviations.
KPMG Professional Judgment Framework:
What is at the center of this framework? How should auditors approach
matters? Correct Ans - - Center of framework: mindset
- Auditor should approach matters with:
1. objectivity
2. independence
, 3. an inquiring mind
Do auditors need a system 1 or system 2 thought process? Why?
Correct Ans - - Need a System 2 thought process
- System 1 ignores the more deliberative system 2 side that critically
analyzes the reasons for/against procedures
Judgments can fall prey to cognitive ______ and ______ that negatively
influence judgments.
What are 3 examples? Correct Ans - - Cognitive traps and biases
1. Group-think (stage 3 of kohlberg's model)
2. Rush to solve problems.
2. Judgment triggers.
What is the result of a judgement trigger? 4 examples of
triggers/tendencies? Correct Ans - - can lead to accepting a
solution before it is properly identified and evaluated.
1. Availability: judge based on accessibility of info instead of deliberative
analysis
2. Confirmation: put more weight on info that confirms initial beliefs
3. Overconfidence: overestimating your ability to make accurate decisions
4. Anchoring: to anchor your conclusion on a piece of info, such as
management's estimate
Professional skepticism links to professional judgment through...
Correct Ans - - through the ethical standards of (1) independent
thought, (2) objectivity, and (3) due care
When differences exist between AICPA and those of the licensing state
board of accountancy, the CPA should... Correct Ans - follow the
state board's rules
Section 1.000.010 of AICPA code of conduct Correct Ans - a
conceptual framework that applies to members in public practice and
provides a foundation to evaluate whether threats to CPA's compliance are
at an acceptable level, and if not, whether safeguards should be developed
to prevent violation of the rules
Conceptual framework for independence:
Professional judgment is influenced by... Correct Ans - personal
behavioral traits (attitudes, ethical values, etc.)
Links:
a. The AICPA code of conduct links ________ to ________
b. Personal values and virtues link _______ to _________ Correct Ans -
a. Code links exercising moral judgements to professional conduct
b. Values link ethical sensitivity to judgement
Ethical awareness of an ethical dilemma is a... Correct Ans - a
mediator of the personal factors and ethical judgment relationship.
KPMG Professional Judgment Framework:
What is judgement? When does it occur? Correct Ans - - the process
of reaching a decision or drawing a conclusion where there are a number of
possible alternative solutions.
- Judgment occurs in a setting of uncertainty, risk, and often conflicts of
interest.
5 Components of the KPMG Professional Judgment Framework Correct
Ans - 1. Clarify issues and objectives.
2. Consider alternatives.
3. Gather and evaluate information.
4. Reach conclusion.
5. Articulate and document rationale.
KPMG Professional Judgment Framework:
What type of framework is it? Explain. Correct Ans - - Prescriptive
framework: in the real world, pressures, time constraints, and limited
capacity may cause deviations.
KPMG Professional Judgment Framework:
What is at the center of this framework? How should auditors approach
matters? Correct Ans - - Center of framework: mindset
- Auditor should approach matters with:
1. objectivity
2. independence
, 3. an inquiring mind
Do auditors need a system 1 or system 2 thought process? Why?
Correct Ans - - Need a System 2 thought process
- System 1 ignores the more deliberative system 2 side that critically
analyzes the reasons for/against procedures
Judgments can fall prey to cognitive ______ and ______ that negatively
influence judgments.
What are 3 examples? Correct Ans - - Cognitive traps and biases
1. Group-think (stage 3 of kohlberg's model)
2. Rush to solve problems.
2. Judgment triggers.
What is the result of a judgement trigger? 4 examples of
triggers/tendencies? Correct Ans - - can lead to accepting a
solution before it is properly identified and evaluated.
1. Availability: judge based on accessibility of info instead of deliberative
analysis
2. Confirmation: put more weight on info that confirms initial beliefs
3. Overconfidence: overestimating your ability to make accurate decisions
4. Anchoring: to anchor your conclusion on a piece of info, such as
management's estimate
Professional skepticism links to professional judgment through...
Correct Ans - - through the ethical standards of (1) independent
thought, (2) objectivity, and (3) due care
When differences exist between AICPA and those of the licensing state
board of accountancy, the CPA should... Correct Ans - follow the
state board's rules
Section 1.000.010 of AICPA code of conduct Correct Ans - a
conceptual framework that applies to members in public practice and
provides a foundation to evaluate whether threats to CPA's compliance are
at an acceptable level, and if not, whether safeguards should be developed
to prevent violation of the rules
Conceptual framework for independence:
