AICPA ETHICS CODE EXAM QUESTIONS
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 - Answers -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.
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 - Answers -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 - Answers -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 - Answers -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 - Answers -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.
Which phrase is used by the Code of Professional Conduct to describe integrity?
A. Forceful advocate of the client's position
B. Valued. business adviser to the client
C. Willing to do what it takes to achieve a proper outcome
D. Candid, within the constraints of client confidentiality - Answers -D. Candid, within the
constraints of client confidentiality
We learned in a previous lesson that integrity means being honest or "candid" - the
opposite of being sneaky or misleading. Integrity is doing the right thing being honest
even if no one is necessarily holding you to that standard. However, as professionals,
we also need to be concerned about client confidentiality. We shouldn't be so honest
that we disclose any information about our clients that is not public. So the best answer
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 - Answers -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.
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 - Answers -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 - Answers -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 - Answers -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 - Answers -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.
Which phrase is used by the Code of Professional Conduct to describe integrity?
A. Forceful advocate of the client's position
B. Valued. business adviser to the client
C. Willing to do what it takes to achieve a proper outcome
D. Candid, within the constraints of client confidentiality - Answers -D. Candid, within the
constraints of client confidentiality
We learned in a previous lesson that integrity means being honest or "candid" - the
opposite of being sneaky or misleading. Integrity is doing the right thing being honest
even if no one is necessarily holding you to that standard. However, as professionals,
we also need to be concerned about client confidentiality. We shouldn't be so honest
that we disclose any information about our clients that is not public. So the best answer
