CPA ETHICS EXAM QUESTIONS AND
ANSWERS
Which58category58contains58the58ethical58standards,58a
violation58of58which58makes58a58member58liable58to58disciplinary
action?
(a)58Ethics58Rulings.
(b)58Interpretations58of58the58Rules.
(c)58Rules.58-58answer--(c)58is58the58conect58answer.58Code58of58Professional
Conduct,58Strncture,58says58that58infraction58of58any58of58the58rules58makes58a58membe
r58liable58to58disciplinary58action.
(a)58is58wrong58since58members58who58depart58from58the
guidance58in58ethical58rulings58in58similar58circumstances
will58be58asked58to58justify58such58departure.58They58cannot
however58be58charged58with58violating58a58ruling.
(b)58is58also58wrong58since58a58member58cannot58be
charged58with58violating58an58interpretation.58In58a58disciplina1y
hearing58where58the58member58was58charged58with
violating58a58rnle,58the58member58would58have58the58burden58of58justifying58any58depart
ure58from58interpretations58ofthat58rule.
The58Trial58Board58may,58after58a58hearing,58do58two58of58the
three58things58listed58below.58Mark58the58one58that58the58Trial
Board58cannot58do.
(a)58Suspend58a58member.
(b)58Suspend58the58member's58CPA58certificate.
(58c)58Expel58a58member.58-58answer--
(b)58is58the58correct58answer.58Code58of58Professional
Conduct,58Enforcement,58says58a58Trial58Board58may
admonish,58suspend58or58expel58a58member.58The58Trial
Board58has58no58jurisdiction58over58a58member's58CPA
certificate.
Which58of58the58following58requires58that58any58changes58in
them58be58approved58by58the58members58of58the58AICPA?
(a)58Rules58and58interpretations58of58the58rules.
(b)58Principles58and58rules.
,(c)58Principles,58rules58and58interpretations58of58the58rules.58-58answer--
(b)58is58correct.58Code58of58Professional58Conduct,
Structure,58says58that58Principles58and58Rules58must58be
approved58by58the58AI58CPA58members.
(a)58is58wrong58and58...
(58c)58is58wrong58since58interpretations58are58prepared58and58issued58by58the58Professio
nal58Ethics58Executive58Committee58without58obtaining58approval58by58the58members.
The58results58of58a58guilty58finding58by58a58Trial58Board58will
be:
(a)58published58by58the58AICPA,58but58the58member58's58name58will58not58be58disclosed.
(b)58published58by58the58AICPA.58and58the58member58's58name58will58be58disclosed58if58t
he58Trial58Board58votes58to58do58
so.
(c)58published58by58the58AICPA58with58the58member58's
name58given.58-58answer--(c)58is58correct.58Code58of58Professional58Conduct,
Enforcement58says58that58Trial58Board58convictions58must
be58published58with58the58member's58name58disclosed.
(a)58is58then58wrong58since58the58name58must58be58disclosed.
(b)58is58also58wrong58since58the58Trial58Board58does58not58have58the58option58of58decidi
ng58whether58or58not58the58member's58name58will58be58disclosed.
An58interpretation58or58ethics58ruling58usually58becomes
effective:
(a)58the58first58day58of58the58month58following58the
month58it58is58published58in58the58Journal58of58Accountancy.
(b)58two58weeks58after58it58is58published58in58The58CPA
Letter.
(c)58the58last58day58of58the58month58in58which58it58is
published58in58the58Journal58of58Accountancy.58-58answer--
(c)58is58corect.58Code58of58Professional58Conduct,
Structure,58says58that58interpretations58and58rulings58are
normally58effective58the58last58day58of58the58month58they58are58published58in58the58Jour
nal58of58Accountancy.
(a)58and58(b)58are58therefore58wrong.
A58CPA58in58public58practice58______________58avoid58operating
under58a58code58of58professional58ethics58by58choosing58not
to58join58either58the58AICPA58or58any58state58CPA58society.
(a)58may
(b)58may58not58-58answer--
(b)58is58correct.58Code58of58Professional58Conduct,58Coverage,58says58that58no58CPA58p
racticing58public58accounting58may58avoid58operating58under58a58code58of58ethics.58The5
8CPA58may58not58join58the58AI58CPA58or58his58or58her58state58CPA58society58and58theref
ore58would58not58be58subject58to58their58codes58of58ethics.58The58CPA,58however,58cann
,ot58avoid58being58subject58to58his58or58her58state58board58of58accountancy's58code58of58
ethics
The58accounting58profession58's58public58includes
(a)58Governmental58agencies.
(b)58Credit58grantors.
(c)58Investors.
(d)58All58of58the58above58-58answer--
(d)58is58the58correct58answer.58As58(see58Article58II)58the
CPA's58public58includes58everyone58that58relies58on58them.58This58then58would58include
(a)58governmental58agencies,
(b)58credit58grantors58and
(c)58investors.
Compliance58with58the58AICPA58Code58of58Professional
Conduct58depends58primarily58on:
(a)58Public58opinion58and58reinforcement58of58one's58attestation58peers.
(b)58Disciplinary58proceedings58when58the58code58is
violated.
(c)58Member's58understanding58the58code58and58voluntary58compliance58with58it.58-
58answer--(c)58is58the58correct58answer.58Composition,58Applicability
and58Compliance58in58the58Articles58says58that58compliance58with58the58code,58as58with5
8all58standards58in58an58open58society,58depends58primarily58on58member58's58understan
ding58of58the58code58and58voluntary58compliance58with58it.
(a)58is58wrong.58This58section58says58that58reinforcement58by58one's58peers58and58public
58opinion58is58secondary58
in58obtaining58compliance58with58the58code.
(b)58is58also58wrong58since58this58section58says58disciplinary58proceedings58against58tho
se58that58violate58the58code58are58the58ultimate58or58final58method58of58obtaining58compl
iance.
The58Principles58state58that58a58member58has58responsibility
to:
(a)58Colleagues.
(b)58Clients.
(c)58The58public.
(d)58All58of58the58above.58-58answer--
(d)58is58correct.58The58Preamble58to58the58Articles58says58that58members58have
(a)58a58responsibility58to58colleagues,
(b)58to58clients58and
(c)58to58the58public.
The58Principles58in58the58AICPA58Code58of58Professional
Conduct58___________________58enforceable58under58their58own58terms.
(a)58are.
(b)58are58not.58-58answer--(b)58is58correct.58Principles58are58not58enforceable58under
, their58own58terms58as58shown58in58the58section58Purpose.58Principles58are58goal-
oriented58and58the58rules58of58
ethics58are58made58and58adopted58within58that58framework.
A58distinguishing58mark58of58a58profession58is:
(a)58Acceptance58of58its58responsibility58to58the58public.
(b)58The58esteem58with58which58it58is58held58by58the58public.
(c)58Its58ability58to58influence58legislation.58-58answer--
(a)58is58correct.58As58stated58in58Article58II,58the58distinguishing58mark58of58a58profession
58is58acceptance58of58its58responsibility58to58the58public.
(b)58The58esteem58by58which58it58is58held58by58the58public
will58come58when58it58shows58its58responsibility58to58the58public.
(c)58Influencing58legislation58may58be58important58to58the58profession58but58it58is58not58th
e58distinguishing58
mark58of58a58profession.
The58AICPA58Code58of58Professional58Conduct58provides
guidance58and58rules58for:
(a)58Only58members58in58public58practice.
(b)58All58members.
(c)58Only58members58engaged58in58rendering58attestation
services.58-58answer--(b)58is58correct.58The58Code58of58Professional58Conduct
provides58rules58for58all58members,58As58stated58in58the58Articles,58section58Compositio
n,58the58membership58
adopted58the58code58to58provide58guidance58and58rules58for58all58members-
those58in58public58practice,58in58
industry,58in58government58and58in58education.
Due58care58requires58a58member58to:
(a)58Perform58work58for58clients58at58the58lowest58cost.
(b)58Perform58work58for58the58clients58with58competence
and58diligence.
(c)58Complete58each58year58a58specified58number58of
hours58of58Continuing58Professional58Education
courses.58-58answer--(b)58is58correct.58Article58V58requires58a58member58to58per-
form58his58professional58work58with58competence58and58diligence.
(a)58The58Principles58do58not58address58the58subject58of58fees58or
(c)58Continuing58Professional58Education.
Jones58&58Barnes,58a58public58accounting58firm,58has58offices
in58Minneapolis,58Chicago58and581058other58cities.58The58firm58's
executive58office58and58the58managing58partner58are58in58Chicago.
Each58office58does58all58the58work58and58issues58the58audit58reports
for58the58clients58of58that58office.58Black58&58Co.58is58an58audit58client
of58the58Minneapolis58office.
State58whether58in58the58following58situations58the58individual
ANSWERS
Which58category58contains58the58ethical58standards,58a
violation58of58which58makes58a58member58liable58to58disciplinary
action?
(a)58Ethics58Rulings.
(b)58Interpretations58of58the58Rules.
(c)58Rules.58-58answer--(c)58is58the58conect58answer.58Code58of58Professional
Conduct,58Strncture,58says58that58infraction58of58any58of58the58rules58makes58a58membe
r58liable58to58disciplinary58action.
(a)58is58wrong58since58members58who58depart58from58the
guidance58in58ethical58rulings58in58similar58circumstances
will58be58asked58to58justify58such58departure.58They58cannot
however58be58charged58with58violating58a58ruling.
(b)58is58also58wrong58since58a58member58cannot58be
charged58with58violating58an58interpretation.58In58a58disciplina1y
hearing58where58the58member58was58charged58with
violating58a58rnle,58the58member58would58have58the58burden58of58justifying58any58depart
ure58from58interpretations58ofthat58rule.
The58Trial58Board58may,58after58a58hearing,58do58two58of58the
three58things58listed58below.58Mark58the58one58that58the58Trial
Board58cannot58do.
(a)58Suspend58a58member.
(b)58Suspend58the58member's58CPA58certificate.
(58c)58Expel58a58member.58-58answer--
(b)58is58the58correct58answer.58Code58of58Professional
Conduct,58Enforcement,58says58a58Trial58Board58may
admonish,58suspend58or58expel58a58member.58The58Trial
Board58has58no58jurisdiction58over58a58member's58CPA
certificate.
Which58of58the58following58requires58that58any58changes58in
them58be58approved58by58the58members58of58the58AICPA?
(a)58Rules58and58interpretations58of58the58rules.
(b)58Principles58and58rules.
,(c)58Principles,58rules58and58interpretations58of58the58rules.58-58answer--
(b)58is58correct.58Code58of58Professional58Conduct,
Structure,58says58that58Principles58and58Rules58must58be
approved58by58the58AI58CPA58members.
(a)58is58wrong58and58...
(58c)58is58wrong58since58interpretations58are58prepared58and58issued58by58the58Professio
nal58Ethics58Executive58Committee58without58obtaining58approval58by58the58members.
The58results58of58a58guilty58finding58by58a58Trial58Board58will
be:
(a)58published58by58the58AICPA,58but58the58member58's58name58will58not58be58disclosed.
(b)58published58by58the58AICPA.58and58the58member58's58name58will58be58disclosed58if58t
he58Trial58Board58votes58to58do58
so.
(c)58published58by58the58AICPA58with58the58member58's
name58given.58-58answer--(c)58is58correct.58Code58of58Professional58Conduct,
Enforcement58says58that58Trial58Board58convictions58must
be58published58with58the58member's58name58disclosed.
(a)58is58then58wrong58since58the58name58must58be58disclosed.
(b)58is58also58wrong58since58the58Trial58Board58does58not58have58the58option58of58decidi
ng58whether58or58not58the58member's58name58will58be58disclosed.
An58interpretation58or58ethics58ruling58usually58becomes
effective:
(a)58the58first58day58of58the58month58following58the
month58it58is58published58in58the58Journal58of58Accountancy.
(b)58two58weeks58after58it58is58published58in58The58CPA
Letter.
(c)58the58last58day58of58the58month58in58which58it58is
published58in58the58Journal58of58Accountancy.58-58answer--
(c)58is58corect.58Code58of58Professional58Conduct,
Structure,58says58that58interpretations58and58rulings58are
normally58effective58the58last58day58of58the58month58they58are58published58in58the58Jour
nal58of58Accountancy.
(a)58and58(b)58are58therefore58wrong.
A58CPA58in58public58practice58______________58avoid58operating
under58a58code58of58professional58ethics58by58choosing58not
to58join58either58the58AICPA58or58any58state58CPA58society.
(a)58may
(b)58may58not58-58answer--
(b)58is58correct.58Code58of58Professional58Conduct,58Coverage,58says58that58no58CPA58p
racticing58public58accounting58may58avoid58operating58under58a58code58of58ethics.58The5
8CPA58may58not58join58the58AI58CPA58or58his58or58her58state58CPA58society58and58theref
ore58would58not58be58subject58to58their58codes58of58ethics.58The58CPA,58however,58cann
,ot58avoid58being58subject58to58his58or58her58state58board58of58accountancy's58code58of58
ethics
The58accounting58profession58's58public58includes
(a)58Governmental58agencies.
(b)58Credit58grantors.
(c)58Investors.
(d)58All58of58the58above58-58answer--
(d)58is58the58correct58answer.58As58(see58Article58II)58the
CPA's58public58includes58everyone58that58relies58on58them.58This58then58would58include
(a)58governmental58agencies,
(b)58credit58grantors58and
(c)58investors.
Compliance58with58the58AICPA58Code58of58Professional
Conduct58depends58primarily58on:
(a)58Public58opinion58and58reinforcement58of58one's58attestation58peers.
(b)58Disciplinary58proceedings58when58the58code58is
violated.
(c)58Member's58understanding58the58code58and58voluntary58compliance58with58it.58-
58answer--(c)58is58the58correct58answer.58Composition,58Applicability
and58Compliance58in58the58Articles58says58that58compliance58with58the58code,58as58with5
8all58standards58in58an58open58society,58depends58primarily58on58member58's58understan
ding58of58the58code58and58voluntary58compliance58with58it.
(a)58is58wrong.58This58section58says58that58reinforcement58by58one's58peers58and58public
58opinion58is58secondary58
in58obtaining58compliance58with58the58code.
(b)58is58also58wrong58since58this58section58says58disciplinary58proceedings58against58tho
se58that58violate58the58code58are58the58ultimate58or58final58method58of58obtaining58compl
iance.
The58Principles58state58that58a58member58has58responsibility
to:
(a)58Colleagues.
(b)58Clients.
(c)58The58public.
(d)58All58of58the58above.58-58answer--
(d)58is58correct.58The58Preamble58to58the58Articles58says58that58members58have
(a)58a58responsibility58to58colleagues,
(b)58to58clients58and
(c)58to58the58public.
The58Principles58in58the58AICPA58Code58of58Professional
Conduct58___________________58enforceable58under58their58own58terms.
(a)58are.
(b)58are58not.58-58answer--(b)58is58correct.58Principles58are58not58enforceable58under
, their58own58terms58as58shown58in58the58section58Purpose.58Principles58are58goal-
oriented58and58the58rules58of58
ethics58are58made58and58adopted58within58that58framework.
A58distinguishing58mark58of58a58profession58is:
(a)58Acceptance58of58its58responsibility58to58the58public.
(b)58The58esteem58with58which58it58is58held58by58the58public.
(c)58Its58ability58to58influence58legislation.58-58answer--
(a)58is58correct.58As58stated58in58Article58II,58the58distinguishing58mark58of58a58profession
58is58acceptance58of58its58responsibility58to58the58public.
(b)58The58esteem58by58which58it58is58held58by58the58public
will58come58when58it58shows58its58responsibility58to58the58public.
(c)58Influencing58legislation58may58be58important58to58the58profession58but58it58is58not58th
e58distinguishing58
mark58of58a58profession.
The58AICPA58Code58of58Professional58Conduct58provides
guidance58and58rules58for:
(a)58Only58members58in58public58practice.
(b)58All58members.
(c)58Only58members58engaged58in58rendering58attestation
services.58-58answer--(b)58is58correct.58The58Code58of58Professional58Conduct
provides58rules58for58all58members,58As58stated58in58the58Articles,58section58Compositio
n,58the58membership58
adopted58the58code58to58provide58guidance58and58rules58for58all58members-
those58in58public58practice,58in58
industry,58in58government58and58in58education.
Due58care58requires58a58member58to:
(a)58Perform58work58for58clients58at58the58lowest58cost.
(b)58Perform58work58for58the58clients58with58competence
and58diligence.
(c)58Complete58each58year58a58specified58number58of
hours58of58Continuing58Professional58Education
courses.58-58answer--(b)58is58correct.58Article58V58requires58a58member58to58per-
form58his58professional58work58with58competence58and58diligence.
(a)58The58Principles58do58not58address58the58subject58of58fees58or
(c)58Continuing58Professional58Education.
Jones58&58Barnes,58a58public58accounting58firm,58has58offices
in58Minneapolis,58Chicago58and581058other58cities.58The58firm58's
executive58office58and58the58managing58partner58are58in58Chicago.
Each58office58does58all58the58work58and58issues58the58audit58reports
for58the58clients58of58that58office.58Black58&58Co.58is58an58audit58client
of58the58Minneapolis58office.
State58whether58in58the58following58situations58the58individual
