WGU D550 – Ethics for Accountants Objective Assessment (OA)
Exam |Comprehensive Questions with Correct Answers and Detailed
Explanations – Latest Update 2026.
Question 1
An external CPA is auditing the financial statements of a publicly traded
company. During the engagement, the CPA learns that their spouse recently
accepted a management position with the audit client and now participates in
preparing financial reports. According to professional ethical standards, what
is the MOST appropriate course of action?
A. Continue the engagement because the CPA is not personally employed by
the client.
B. Evaluate whether independence has been impaired and withdraw from the
engagement if independence cannot be maintained.
C. Continue the audit but disclose the relationship only to the client.
D. Ignore the relationship because financial reporting is the spouse's
responsibility.
Correct Answer: B. Evaluate whether independence has been impaired
and withdraw from the engagement if independence cannot be
maintained.
Explanation:
Independence is a cornerstone of the accounting profession. A close family
member in a key position at an audit client creates a significant threat to
independence. If safeguards cannot eliminate the threat, the CPA should
withdraw from the engagement.
Question 2
Which of the following best describes the ethical principle of integrity?
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,A. Avoiding all communication with clients.
B. Being honest, truthful, and straightforward in all professional activities.
C. Maximizing company profits regardless of consequences.
D. Following management instructions without question.
Correct Answer: B. Being honest, truthful, and straightforward in all
professional activities.
Explanation:
Integrity requires accountants to act honestly and fairly while maintaining
professional credibility.
Question 3
A CPA discovers that management intentionally omitted significant liabilities
from the financial statements to improve the company's financial position
before applying for a bank loan. What is the MOST ethical response?
A. Ignore the issue because management is responsible for the statements.
B. Inform management of the issue, require appropriate correction, and
consider withdrawing from the engagement if management refuses.
C. Approve the statements to preserve the client relationship.
D. Delay reporting until after the loan is approved.
Correct Answer: B. Inform management of the issue, require appropriate
correction, and consider withdrawing from the engagement if
management refuses.
Explanation:
Professional ethics require accountants to address material misstatements
and avoid association with misleading financial information.
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,Question 4
Objectivity requires accountants to:
A. Make decisions free from bias, conflicts of interest, or undue influence.
B. Always support management decisions.
C. Maximize shareholder wealth regardless of ethics.
D. Avoid documenting disagreements.
Correct Answer: A. Make decisions free from bias, conflicts of interest, or
undue influence.
Explanation:
Objectivity ensures professional judgments are based on facts rather than
personal interests.
Question 5
Which of the following represents a self-interest threat to independence?
A. The auditor owns stock in the audit client.
B. The auditor reviews prior-year work papers.
C. The auditor consults technical accounting guidance.
D. The auditor participates in continuing education.
Correct Answer: A. The auditor owns stock in the audit client.
Explanation:
Financial interests in an audit client create a self-interest threat that may
impair independence.
Question 6
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, Professional skepticism is best defined as:
A. Maintaining a questioning mind and critically evaluating audit evidence.
B. Distrusting every client regardless of evidence.
C. Assuming management is dishonest.
D. Accepting all management explanations without verification.
Correct Answer: A. Maintaining a questioning mind and critically
evaluating audit evidence.
Explanation:
Professional skepticism helps auditors identify material misstatements
resulting from error or fraud.
Question 7
Which ethical principle requires accountants to maintain the knowledge and
skills necessary to provide competent professional services?
A. Due care.
B. Confidentiality.
C. Loyalty.
D. Advocacy.
Correct Answer: A. Due care.
Explanation:
Due care requires continuous learning and diligent performance.
Question 8
4|Page
Exam |Comprehensive Questions with Correct Answers and Detailed
Explanations – Latest Update 2026.
Question 1
An external CPA is auditing the financial statements of a publicly traded
company. During the engagement, the CPA learns that their spouse recently
accepted a management position with the audit client and now participates in
preparing financial reports. According to professional ethical standards, what
is the MOST appropriate course of action?
A. Continue the engagement because the CPA is not personally employed by
the client.
B. Evaluate whether independence has been impaired and withdraw from the
engagement if independence cannot be maintained.
C. Continue the audit but disclose the relationship only to the client.
D. Ignore the relationship because financial reporting is the spouse's
responsibility.
Correct Answer: B. Evaluate whether independence has been impaired
and withdraw from the engagement if independence cannot be
maintained.
Explanation:
Independence is a cornerstone of the accounting profession. A close family
member in a key position at an audit client creates a significant threat to
independence. If safeguards cannot eliminate the threat, the CPA should
withdraw from the engagement.
Question 2
Which of the following best describes the ethical principle of integrity?
1|Page
,A. Avoiding all communication with clients.
B. Being honest, truthful, and straightforward in all professional activities.
C. Maximizing company profits regardless of consequences.
D. Following management instructions without question.
Correct Answer: B. Being honest, truthful, and straightforward in all
professional activities.
Explanation:
Integrity requires accountants to act honestly and fairly while maintaining
professional credibility.
Question 3
A CPA discovers that management intentionally omitted significant liabilities
from the financial statements to improve the company's financial position
before applying for a bank loan. What is the MOST ethical response?
A. Ignore the issue because management is responsible for the statements.
B. Inform management of the issue, require appropriate correction, and
consider withdrawing from the engagement if management refuses.
C. Approve the statements to preserve the client relationship.
D. Delay reporting until after the loan is approved.
Correct Answer: B. Inform management of the issue, require appropriate
correction, and consider withdrawing from the engagement if
management refuses.
Explanation:
Professional ethics require accountants to address material misstatements
and avoid association with misleading financial information.
2|Page
,Question 4
Objectivity requires accountants to:
A. Make decisions free from bias, conflicts of interest, or undue influence.
B. Always support management decisions.
C. Maximize shareholder wealth regardless of ethics.
D. Avoid documenting disagreements.
Correct Answer: A. Make decisions free from bias, conflicts of interest, or
undue influence.
Explanation:
Objectivity ensures professional judgments are based on facts rather than
personal interests.
Question 5
Which of the following represents a self-interest threat to independence?
A. The auditor owns stock in the audit client.
B. The auditor reviews prior-year work papers.
C. The auditor consults technical accounting guidance.
D. The auditor participates in continuing education.
Correct Answer: A. The auditor owns stock in the audit client.
Explanation:
Financial interests in an audit client create a self-interest threat that may
impair independence.
Question 6
3|Page
, Professional skepticism is best defined as:
A. Maintaining a questioning mind and critically evaluating audit evidence.
B. Distrusting every client regardless of evidence.
C. Assuming management is dishonest.
D. Accepting all management explanations without verification.
Correct Answer: A. Maintaining a questioning mind and critically
evaluating audit evidence.
Explanation:
Professional skepticism helps auditors identify material misstatements
resulting from error or fraud.
Question 7
Which ethical principle requires accountants to maintain the knowledge and
skills necessary to provide competent professional services?
A. Due care.
B. Confidentiality.
C. Loyalty.
D. Advocacy.
Correct Answer: A. Due care.
Explanation:
Due care requires continuous learning and diligent performance.
Question 8
4|Page
