WGU D550 ETHICS FOR ACCOUNTANTS OA
FINAL EXAM 2025/2026 WITH ACTUAL
CORRECT QUESTIONS AND VERIFIED
DETAILED ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST|BRAND NEW VERSION
!! |GUARANTEED PASS
What was the largest ever whistleblower award?
$50 million
Digital Reality Trust v Sommers:
- may drive would be whistleblowers to the SEC sooner
- may restrict reports because of fear of retaliation
- seems to contradict the need for internal reporting before going outside and reporting to the
SEC
- may create unnessesary stress between accounting/compliance officials and top management
Erhart v Bofl Holdings:
- clarifies that employer confidentiality agreements fo not supersede federal whistleblower
rights
- signals that relaitory lawsuits against whistleblowers are unlikely to succeed
- provides guidance to corporate whistleblowers concerning the use of company documents to
blow the whistle
AICPA Revised Code: Independence for Members in Public Practice
- conceptual framework incorporates a "threats and safeguards" approach
- new section on "Ethical Conflicts"
- violaton of the rules for a CPA to permit others acting on his behalf to engage in behavior that
would have been a violation for the CPA
- when differences exist between AICPA and those of the licensing state board of accountancy,
the CPA should follow the state board's rules
AICPA uses risk based approach for analyzing threats using the following steps:
1|Page
,- identifying and evaluating threats to independence
- determining whether safeguards already eliminate or sufficiently mitigate identified threats
and whether threats that have not yet been mitigated can be eliminated or sufficiently
mitigated by safeguards
- if no safeguards are available to eliminate an unacceptable threat or reduce it to an acceptable
level, indpendence would be considered impaired
Sec 201 of SOX states that the following nonattest services may not be performed for attest
clients in addition to bookkeeping or other services related to the accounting records or FS of
the audit client:
1) financial information systems design and implementation
2) appriasal or valuation services, fairness opinions, or contribution-in-kind reports
3) actuarial services
4) internal audit outsourcing services
5) management functions or HR
6) broker or dealer, investment advisor, or investment banking services
7) legal services and expert services unrelated to the audit
8) any other service that the board of directors determines, by regulation, is impermissable
What kind of relationships might impair independence?
financial relationships, business relationships, employment or association with attest clients,
providing non-attest services to an attest client, nontraditional forms of ownership
Independence may be impaired when a partner or professional employee leaves the firm and is
subsequently employed by the client in a key position unless the following is met:
- amounts due to the former professional are not material to the firm
- the former professional is not in a position to influence the accounting firm's operations or
financial policies
- the former professional employee does not participate in or appear to participate in or is not
associated with the firm once the relationship with the client begins
Attest clients must agree to perform the following functions:
- assume all management responsibilities
- designate a competent overseer of these services
- evaluate adequacy and results of services performed
- accept responsibility for the results of the services
3 principles that underlie auditor independence:
2|Page
,- an auditor cannot function in the role of management
- an auditor cannot audit their own work
- an auditor cannot serve in an advocacy role for their client
If a situation results in any of the following, the auditors independence may be impaired:
- creates a mutual or conflicting interest between an accountant and his audit client
- places an accountant in the position of auditing his or her won work
- results in an accountant acting as management or employee of the audit client
- places an accountant in position of being an advocate for the client
What actions did the SEC take against the big 4 audit firms?
PWC - violated independence rules when it performed restricted nonaudit services to audit
clients
EY - audited partners engaged in personal relationships with client's CEO
KPMG - former partner engaged in insider trading of non-public information
Deloitte - deloitte manager maintained bank accounts with audit client
Using a materiality criterion to determine whether certain nonaudit services should be allowed
opes a can of worms. Logical questions would be:
1) Is independence a standard left to the individual judgment of the auditors or is it based on
SEC regulations and PCAOB standards?
2) Where do you draw the line in making materiality determinations?
Safeguards of integrity and objectivity include:
- implementing mechanisms to prevent disclosure or violation of confidentiality
- senior individual not involved in the engagement regularly reviewing safeguards
- member of the firm not involved in the conflict reviews the work performed to assess whether
key judgements and conclusions are appropriate
- consulting with thirs parties, such as professional body, legal counsel, or another CPA
Safeguards to mitigate risks of threats:
- tone at the top
- policies, procedures, implementation, and monitoring addressing ethical conduct and
compliance with laws and regulation
- internal policies and procedures for disclosure of interests and relationships
- whistleblower hotlines and reporting structure
- internal auditors not allowed to audit areas where they have operational responsibilities
3|Page
, - policies for promotion, rewards and enforcement of a culture of high ethics and integrity
- use of 3rd party resources for consultation as needed
establishes requirements for competence, compliance with professional standards, and
adherence to accounting principles
General Standards Rule
Acts Discredible Rule covers a broad number of actions that may bring discredit to the
profession including:
- discrimination and harassment
- failure of a CPA/CPA firm to file and pay taxes
- negligence in preparation of FS or records
- standards relating to government accoutning and auditing
- solicitation or disclosure of CPA examination questions and answers
The record requests rule governs the difference between:
client-provided records, member-prepared records (closing or adjusting entries), member's
work products (tax returns), and members working papers (such as audit programs, analytical
review schedules, and statistical sampling results and analysis)
What kind of client are contingent fees prohibited from?
attest clients
Prohibits acceptance of contingent fees if CPA or firm performs any of the following:
1) an audit or review of FS
2) compliation of FS that a 3rd party may use
3) examination of prospective financial information
4) prepares origional/amended tax return
Advertising and Solicitation permitted:
- requires that advertising not be false, deceptive, or misleading
- cannot imply ability to influence official bodies
- cannot contain a representation that specific services will be performed for a stated fee, when
such fees would be substaintially increased
- prohibits solicitation by use of coercion, over-reaching, or harassing conduct
- cannot contain any representation that would be likely to cause a reasonable person to
misunderstand or be decieved
Confidentiality information:
4|Page
FINAL EXAM 2025/2026 WITH ACTUAL
CORRECT QUESTIONS AND VERIFIED
DETAILED ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST|BRAND NEW VERSION
!! |GUARANTEED PASS
What was the largest ever whistleblower award?
$50 million
Digital Reality Trust v Sommers:
- may drive would be whistleblowers to the SEC sooner
- may restrict reports because of fear of retaliation
- seems to contradict the need for internal reporting before going outside and reporting to the
SEC
- may create unnessesary stress between accounting/compliance officials and top management
Erhart v Bofl Holdings:
- clarifies that employer confidentiality agreements fo not supersede federal whistleblower
rights
- signals that relaitory lawsuits against whistleblowers are unlikely to succeed
- provides guidance to corporate whistleblowers concerning the use of company documents to
blow the whistle
AICPA Revised Code: Independence for Members in Public Practice
- conceptual framework incorporates a "threats and safeguards" approach
- new section on "Ethical Conflicts"
- violaton of the rules for a CPA to permit others acting on his behalf to engage in behavior that
would have been a violation for the CPA
- when differences exist between AICPA and those of the licensing state board of accountancy,
the CPA should follow the state board's rules
AICPA uses risk based approach for analyzing threats using the following steps:
1|Page
,- identifying and evaluating threats to independence
- determining whether safeguards already eliminate or sufficiently mitigate identified threats
and whether threats that have not yet been mitigated can be eliminated or sufficiently
mitigated by safeguards
- if no safeguards are available to eliminate an unacceptable threat or reduce it to an acceptable
level, indpendence would be considered impaired
Sec 201 of SOX states that the following nonattest services may not be performed for attest
clients in addition to bookkeeping or other services related to the accounting records or FS of
the audit client:
1) financial information systems design and implementation
2) appriasal or valuation services, fairness opinions, or contribution-in-kind reports
3) actuarial services
4) internal audit outsourcing services
5) management functions or HR
6) broker or dealer, investment advisor, or investment banking services
7) legal services and expert services unrelated to the audit
8) any other service that the board of directors determines, by regulation, is impermissable
What kind of relationships might impair independence?
financial relationships, business relationships, employment or association with attest clients,
providing non-attest services to an attest client, nontraditional forms of ownership
Independence may be impaired when a partner or professional employee leaves the firm and is
subsequently employed by the client in a key position unless the following is met:
- amounts due to the former professional are not material to the firm
- the former professional is not in a position to influence the accounting firm's operations or
financial policies
- the former professional employee does not participate in or appear to participate in or is not
associated with the firm once the relationship with the client begins
Attest clients must agree to perform the following functions:
- assume all management responsibilities
- designate a competent overseer of these services
- evaluate adequacy and results of services performed
- accept responsibility for the results of the services
3 principles that underlie auditor independence:
2|Page
,- an auditor cannot function in the role of management
- an auditor cannot audit their own work
- an auditor cannot serve in an advocacy role for their client
If a situation results in any of the following, the auditors independence may be impaired:
- creates a mutual or conflicting interest between an accountant and his audit client
- places an accountant in the position of auditing his or her won work
- results in an accountant acting as management or employee of the audit client
- places an accountant in position of being an advocate for the client
What actions did the SEC take against the big 4 audit firms?
PWC - violated independence rules when it performed restricted nonaudit services to audit
clients
EY - audited partners engaged in personal relationships with client's CEO
KPMG - former partner engaged in insider trading of non-public information
Deloitte - deloitte manager maintained bank accounts with audit client
Using a materiality criterion to determine whether certain nonaudit services should be allowed
opes a can of worms. Logical questions would be:
1) Is independence a standard left to the individual judgment of the auditors or is it based on
SEC regulations and PCAOB standards?
2) Where do you draw the line in making materiality determinations?
Safeguards of integrity and objectivity include:
- implementing mechanisms to prevent disclosure or violation of confidentiality
- senior individual not involved in the engagement regularly reviewing safeguards
- member of the firm not involved in the conflict reviews the work performed to assess whether
key judgements and conclusions are appropriate
- consulting with thirs parties, such as professional body, legal counsel, or another CPA
Safeguards to mitigate risks of threats:
- tone at the top
- policies, procedures, implementation, and monitoring addressing ethical conduct and
compliance with laws and regulation
- internal policies and procedures for disclosure of interests and relationships
- whistleblower hotlines and reporting structure
- internal auditors not allowed to audit areas where they have operational responsibilities
3|Page
, - policies for promotion, rewards and enforcement of a culture of high ethics and integrity
- use of 3rd party resources for consultation as needed
establishes requirements for competence, compliance with professional standards, and
adherence to accounting principles
General Standards Rule
Acts Discredible Rule covers a broad number of actions that may bring discredit to the
profession including:
- discrimination and harassment
- failure of a CPA/CPA firm to file and pay taxes
- negligence in preparation of FS or records
- standards relating to government accoutning and auditing
- solicitation or disclosure of CPA examination questions and answers
The record requests rule governs the difference between:
client-provided records, member-prepared records (closing or adjusting entries), member's
work products (tax returns), and members working papers (such as audit programs, analytical
review schedules, and statistical sampling results and analysis)
What kind of client are contingent fees prohibited from?
attest clients
Prohibits acceptance of contingent fees if CPA or firm performs any of the following:
1) an audit or review of FS
2) compliation of FS that a 3rd party may use
3) examination of prospective financial information
4) prepares origional/amended tax return
Advertising and Solicitation permitted:
- requires that advertising not be false, deceptive, or misleading
- cannot imply ability to influence official bodies
- cannot contain a representation that specific services will be performed for a stated fee, when
such fees would be substaintially increased
- prohibits solicitation by use of coercion, over-reaching, or harassing conduct
- cannot contain any representation that would be likely to cause a reasonable person to
misunderstand or be decieved
Confidentiality information:
4|Page
