AICPA ETHICS CODE EXAM REVIEW
QUESTION SET WITH ACCURATE
ANSWERS
◉ Under the Code of Professional Conduct of the AICPA, which of
the following is required to be independent in fact and
appearance when discharging professional responsibilities?
Answer: A CPA in public practice providing auditing and other
attestation services
◉ According to the Code of Professional Conduct of the AICPA, for
which type of service may a CPA receive a contingent fee?
Answer: Seeking a private letter ruling
◉ According to the profession's ethical standards, which of the
following events may justify a departure from a FASB Accounting
Standard (FASB ASC)?
Answer: Both new legislation and evolution of a new form of
business transaction
◉ Smith, CPA, is a partner of Johnson Accounting Firm. Johnson
audited the books of Hometown Bank. Smith's independence
would be impaired under which of the following circumstances?
Answer: Smith is a director of Hometown Bank.
, ◉ A company hires one of its board members, a CPA, to issue
accounting reports for the company. Assuming that any required
disclosures are made, which of the following reports may the CPA
issue without violating independence rules?
Answer: Compilations
◉ Able, CPA, was engaged by Wedge Corp. to audit Wedge's
financial statements. Wedge intended to use the audit report to
obtain a $10 million loan from Care Bank. Able and Wedge's
president agreed that Able would give an unmodified opinion on
Wedge's financial statements in the audit report even though
there were material misstatements in the financial statements.
Care refused to make the loan. Wedge then gave the audit report
to Ranch to encourage Ranch to purchase $10 million worth of
Wedge common stock. Ranch reviewed the audit report and relied
on it to purchase the stock. After the purchase, Able's agreement
with Wedge's president was revealed. As a result, Wedge stock
lost half its value and Ranch sued Able for fraud. What will be the
result of Ranch's suit?
Answer: Ranch will win because Able intentionally gave an
unmodified opinion on Wedge's materially misstated financial
statements.
◉ According to the profession's standards, which of the following
would be considered consulting services?
Answer: Advisory, implementation, and product services
QUESTION SET WITH ACCURATE
ANSWERS
◉ Under the Code of Professional Conduct of the AICPA, which of
the following is required to be independent in fact and
appearance when discharging professional responsibilities?
Answer: A CPA in public practice providing auditing and other
attestation services
◉ According to the Code of Professional Conduct of the AICPA, for
which type of service may a CPA receive a contingent fee?
Answer: Seeking a private letter ruling
◉ According to the profession's ethical standards, which of the
following events may justify a departure from a FASB Accounting
Standard (FASB ASC)?
Answer: Both new legislation and evolution of a new form of
business transaction
◉ Smith, CPA, is a partner of Johnson Accounting Firm. Johnson
audited the books of Hometown Bank. Smith's independence
would be impaired under which of the following circumstances?
Answer: Smith is a director of Hometown Bank.
, ◉ A company hires one of its board members, a CPA, to issue
accounting reports for the company. Assuming that any required
disclosures are made, which of the following reports may the CPA
issue without violating independence rules?
Answer: Compilations
◉ Able, CPA, was engaged by Wedge Corp. to audit Wedge's
financial statements. Wedge intended to use the audit report to
obtain a $10 million loan from Care Bank. Able and Wedge's
president agreed that Able would give an unmodified opinion on
Wedge's financial statements in the audit report even though
there were material misstatements in the financial statements.
Care refused to make the loan. Wedge then gave the audit report
to Ranch to encourage Ranch to purchase $10 million worth of
Wedge common stock. Ranch reviewed the audit report and relied
on it to purchase the stock. After the purchase, Able's agreement
with Wedge's president was revealed. As a result, Wedge stock
lost half its value and Ranch sued Able for fraud. What will be the
result of Ranch's suit?
Answer: Ranch will win because Able intentionally gave an
unmodified opinion on Wedge's materially misstated financial
statements.
◉ According to the profession's standards, which of the following
would be considered consulting services?
Answer: Advisory, implementation, and product services
