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AICPA ETHICS EXAM – PRACTICE QUESTIONS
(VERSION A) WITH VERIFIED ANSWERS 2026
LATEST VERSION
Level: CPA / Professional Ethics
Total Questions: 100
Format: Multiple Choice (MCQ) with answers and rationales
Question 1
A CPA discovers a material misstatement in a client’s financial
statements after issuance. What is the CPA’s ethical
responsibility?
A. Ignore it if the client refuses to act
B. Notify appropriate parties and attempt to correct
C. Resign immediately without disclosure
D. Modify the audit opinion retrospectively
Correct Answer: B
Rationale:
• B is correct: A CPA must act with integrity, communicate
issues to management and those charged with
governance, and take steps to correct.
• A, C, D: Fail to meet professional responsibility.
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Question 2
Which of the following impairs independence?
A. Owning a small amount of mutual funds unrelated to the
client
B. A close relative working in a key position at the client
C. Receiving a fixed consulting fee unrelated to audit findings
D. None of the above
Correct Answer: B
Rationale:
• B is correct: Close relatives in key positions create a self-
interest threat to independence.
Question 3
A CPA discovers the client is engaged in illegal activity. What is
the first step?
A. Report to the SEC immediately
B. Discuss with client management
C. Publicly disclose without consulting management
D. Ignore if immaterial
Correct Answer: B
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Rationale:
• B is correct: Professional ethics require attempting
resolution with management first before external
reporting.
Question 4
Which action violates the AICPA Code of Professional Conduct?
A. Disclosing confidential client information with client consent
B. Accepting a gift from a client to influence independence
C. Issuing a financial statement review report
D. Using judgment in applying GAAP
Correct Answer: B
Rationale:
• B is correct: Gifts intended to influence independence
violate integrity and objectivity.
Question 5
What is the best practice if a CPA is offered an engagement but
has a financial interest in the client?
A. Accept engagement without disclosure
B. Disclose the interest and remove the threat to independence
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C. Ignore the interest if it’s small
D. Transfer the interest to a relative
Correct Answer: B
Rationale:
• B is correct: Independence threats must be addressed by
disclosure or elimination.
Question 6
A CPA issues an unqualified audit report but later discovers a
subsequent event that affects the financials. What should the
CPA do?
A. Ignore it
B. Notify the client and evaluate the need for revision or
disclosure
C. Immediately resign
D. Report to IRS
Correct Answer: B
Rationale:
• B is correct: The CPA must ensure financial statements
remain accurate and fully disclosed.
AICPA ETHICS EXAM – PRACTICE QUESTIONS
(VERSION A) WITH VERIFIED ANSWERS 2026
LATEST VERSION
Level: CPA / Professional Ethics
Total Questions: 100
Format: Multiple Choice (MCQ) with answers and rationales
Question 1
A CPA discovers a material misstatement in a client’s financial
statements after issuance. What is the CPA’s ethical
responsibility?
A. Ignore it if the client refuses to act
B. Notify appropriate parties and attempt to correct
C. Resign immediately without disclosure
D. Modify the audit opinion retrospectively
Correct Answer: B
Rationale:
• B is correct: A CPA must act with integrity, communicate
issues to management and those charged with
governance, and take steps to correct.
• A, C, D: Fail to meet professional responsibility.
,2
Question 2
Which of the following impairs independence?
A. Owning a small amount of mutual funds unrelated to the
client
B. A close relative working in a key position at the client
C. Receiving a fixed consulting fee unrelated to audit findings
D. None of the above
Correct Answer: B
Rationale:
• B is correct: Close relatives in key positions create a self-
interest threat to independence.
Question 3
A CPA discovers the client is engaged in illegal activity. What is
the first step?
A. Report to the SEC immediately
B. Discuss with client management
C. Publicly disclose without consulting management
D. Ignore if immaterial
Correct Answer: B
,3
Rationale:
• B is correct: Professional ethics require attempting
resolution with management first before external
reporting.
Question 4
Which action violates the AICPA Code of Professional Conduct?
A. Disclosing confidential client information with client consent
B. Accepting a gift from a client to influence independence
C. Issuing a financial statement review report
D. Using judgment in applying GAAP
Correct Answer: B
Rationale:
• B is correct: Gifts intended to influence independence
violate integrity and objectivity.
Question 5
What is the best practice if a CPA is offered an engagement but
has a financial interest in the client?
A. Accept engagement without disclosure
B. Disclose the interest and remove the threat to independence
, 4
C. Ignore the interest if it’s small
D. Transfer the interest to a relative
Correct Answer: B
Rationale:
• B is correct: Independence threats must be addressed by
disclosure or elimination.
Question 6
A CPA issues an unqualified audit report but later discovers a
subsequent event that affects the financials. What should the
CPA do?
A. Ignore it
B. Notify the client and evaluate the need for revision or
disclosure
C. Immediately resign
D. Report to IRS
Correct Answer: B
Rationale:
• B is correct: The CPA must ensure financial statements
remain accurate and fully disclosed.
