Page 1 of 116
“AICPA ETHICS CODE EXAM 2026 ”LATEST
EXAM 2026 – 2027 SOLVED QUESTIONS &
ANSWERS VERIFIED 100% GRADED A+ (LATEST
VERSION) WELL REVISED 100% GUARANTEE
PASS
AICPA Ethics Code Exam
A new staff accountant obtains an automobile loan under normal term and
conditions from an audit client to purchase a BW sports car. The car is
material to his net worth; it is his net worth as is the amount borrowed. He is a
covered member of the lender. Did this loan impair independence?
A. No, because it is fully secured (collateralized) by the automobile
B. No, if it was used to purchase a foreign car
C. Yes, because it is material to the staff's net worth
D. Yes, if the sticker price exceeds $40,000
A. No, because it is fully secured (collateralized) by the automobile
An auto loan does not impair independence if it is obtained under the lender's normal
terms and conditions and is fully secured by the vehicle. Car loans that are fully
secured (collateralized) is a permitted loan that is an exception to the independence
rules (See slide 13).
A manager obtained her MBA prior to joining the firm 2013. While going to
school, she obtained student loans under the lenders normal terms and
conditions that are not material to her net worth. She is a covered member of
the lender that made the loan. Does this loan impair independence?
, Page 2 of 116
A. No, because the money way used to obtain a student loan
B. No, because the loan is not material to the managers net worth and was
obtained prior to her joining the firm
C. Yes, if the manager obtained it within 5 years of joining the firm
D. Yes, because the manager is a covered member
B. No, because the loan is not material to the manager's net worth and was obtained
prior to her joining the firm
A grandfathered and or covered member loan does not impair independence if the
loan is immaterial to her net worth and she meets the other requirements for
grandfathering. Certain grandfathered loans are an exception to the independence
rules (see slide 14).
A tax partner obtained a personal loan from a business associate in 2010. In
2014, the business associate became a director of the partner's client which is
also an audit client of the firm. Does this loan impair independence?
A. Probably, because she is aware of the situation, the partner should evaluate
the loan under the conceptual framework
B. Yes, the partner should renegotiate the loan as soon as possible
C. No, because the lender is a colleague, not an attest client
D. No, because the partner acquired the loan before the lender became a
director of an audit client
A. Probably, because she is aware of the situation, the partner should evaluate the
loan under the conceptual framework
When aware, a covered member should evaluate possible threats to independence
caused by a lending relationship with an officer, director, or 10% or greater
shareholder of an audit client's affiliate.
A staff member has a credit card from an attest client with respect to which he
is a covered member. The balance on his current credit card statement is
$10,100 and is material to his net worth. Does this impair independence?
A. No, because credit card loans do not create threats to independence
B. No, because the staff member rarely uses the credit card
C. Yes, because the month purchases are material to the staff person's net
worth
D. Yes, if the staff person does not. maintain a current balance of $10,000 or
less
, Page 3 of 116
D. Yes, if the staff person does not maintain a current balance of $10,000 or less
If the stand maintains a balance of $10,000 or less on a current basis, taking in to
consideration the payment due date and any available grace period, the loan does
not impair independence. See slide 13 - since the amount is over $10,000
independence would be impaired
When performing non attest services for clients, which of these is the CPAs
(AICPA member's) responsibility?
A. Evaluate the adequacy of the services performed
B. Establish an understanding with the client as to the services to be
performed
C. Design and implement the company's internal controls
D. All of these options
D. Establish an understanding with the client as to the services to be performed
See slide 3. The member (CPA) is required to establish an understanding with the
client concerning the services to be performed. The other two choices are
management's responsibility.
Rogers CPA is engaged to perform bookkeeping services (a non attest
service) for an attest client. Which activity will impair Roger's independence?
A. Supervise the client's employees as they perform their normal activities
B. Post client-approve entries to the client's trial balance
C. Advise the client on current accounting issues
D. None of these would impair independence
A. Supervise the client's employees as they perform their normal activities
See slide 10. Supervising client employees in the performance of their normal
recurring activities impairs a member's independence. Posting entries is fine as long
as the client approves the entry (you're just transferring numbers to the trial balance)
and advising the client on issues is a typical nonattest service that wouldn't impair
independence.
Which activity would be least likely to create unacceptable threats to a
member's independence?
A. Consummate a translation on behalf of the client with potential investors
B. Prepare financial statements based on the client's trial balance
C. Prepare source documents for the client
, Page 4 of 116
B. Prepare financial statements based on the client's trial balance
A member may prepare financial statements from a client's trial balance without
impairing independence. It's simply taking financial statement data the client
prepared and approved and organizing it into the four statements. The other two
options were mentioned on previous slides as activities a member should not do,
since those would impair the CPA's independence. So B would be the least likely to
impair independence.
Mermaid Co. engages Olsen CPAs to help improve the operating effectiveness
of certain internal controls. Olsen also audits Mermaid's financial statements.
Which of these creates an unacceptable management participation threat to
Olsen's independence?
A. Provide research materials to Mermaid's management
B. Make recommendations to Mermaid
C. Set policy for Mermaid
C. Set policy for Mermaid
Setting policy is considered a management responsibility that the CPA must not
perform for an attest client.
Deen's CPA accepts a commission from Lara Corp, a financial statement
review client, for referring Lara to an insurer. Which statement is accurate
regarding commissions?
A. The commission is prohibited because a review client paid the fee for
Deen's referral of business to a third party
B. The commission is prohibited if the fee structure is material to Deen and will
be paid to Deen over a period of time
C. The commission is permitted if Deen discloses to Lara that I will e receiving
the fee
D. The commission is permitted because Deen does not perform an audit of
Lara's financial statements
A. The commission is prohibited because a review client paid the fee for Deen's
referral of business to a third party
Since Lara is a review client, Deen is prohibited from receiving a commission for
either (a) recommending to Lara services or products that a third party will provide,
or (b) recommending Lara's services or products to others. See slide 34 and 36.
“AICPA ETHICS CODE EXAM 2026 ”LATEST
EXAM 2026 – 2027 SOLVED QUESTIONS &
ANSWERS VERIFIED 100% GRADED A+ (LATEST
VERSION) WELL REVISED 100% GUARANTEE
PASS
AICPA Ethics Code Exam
A new staff accountant obtains an automobile loan under normal term and
conditions from an audit client to purchase a BW sports car. The car is
material to his net worth; it is his net worth as is the amount borrowed. He is a
covered member of the lender. Did this loan impair independence?
A. No, because it is fully secured (collateralized) by the automobile
B. No, if it was used to purchase a foreign car
C. Yes, because it is material to the staff's net worth
D. Yes, if the sticker price exceeds $40,000
A. No, because it is fully secured (collateralized) by the automobile
An auto loan does not impair independence if it is obtained under the lender's normal
terms and conditions and is fully secured by the vehicle. Car loans that are fully
secured (collateralized) is a permitted loan that is an exception to the independence
rules (See slide 13).
A manager obtained her MBA prior to joining the firm 2013. While going to
school, she obtained student loans under the lenders normal terms and
conditions that are not material to her net worth. She is a covered member of
the lender that made the loan. Does this loan impair independence?
, Page 2 of 116
A. No, because the money way used to obtain a student loan
B. No, because the loan is not material to the managers net worth and was
obtained prior to her joining the firm
C. Yes, if the manager obtained it within 5 years of joining the firm
D. Yes, because the manager is a covered member
B. No, because the loan is not material to the manager's net worth and was obtained
prior to her joining the firm
A grandfathered and or covered member loan does not impair independence if the
loan is immaterial to her net worth and she meets the other requirements for
grandfathering. Certain grandfathered loans are an exception to the independence
rules (see slide 14).
A tax partner obtained a personal loan from a business associate in 2010. In
2014, the business associate became a director of the partner's client which is
also an audit client of the firm. Does this loan impair independence?
A. Probably, because she is aware of the situation, the partner should evaluate
the loan under the conceptual framework
B. Yes, the partner should renegotiate the loan as soon as possible
C. No, because the lender is a colleague, not an attest client
D. No, because the partner acquired the loan before the lender became a
director of an audit client
A. Probably, because she is aware of the situation, the partner should evaluate the
loan under the conceptual framework
When aware, a covered member should evaluate possible threats to independence
caused by a lending relationship with an officer, director, or 10% or greater
shareholder of an audit client's affiliate.
A staff member has a credit card from an attest client with respect to which he
is a covered member. The balance on his current credit card statement is
$10,100 and is material to his net worth. Does this impair independence?
A. No, because credit card loans do not create threats to independence
B. No, because the staff member rarely uses the credit card
C. Yes, because the month purchases are material to the staff person's net
worth
D. Yes, if the staff person does not. maintain a current balance of $10,000 or
less
, Page 3 of 116
D. Yes, if the staff person does not maintain a current balance of $10,000 or less
If the stand maintains a balance of $10,000 or less on a current basis, taking in to
consideration the payment due date and any available grace period, the loan does
not impair independence. See slide 13 - since the amount is over $10,000
independence would be impaired
When performing non attest services for clients, which of these is the CPAs
(AICPA member's) responsibility?
A. Evaluate the adequacy of the services performed
B. Establish an understanding with the client as to the services to be
performed
C. Design and implement the company's internal controls
D. All of these options
D. Establish an understanding with the client as to the services to be performed
See slide 3. The member (CPA) is required to establish an understanding with the
client concerning the services to be performed. The other two choices are
management's responsibility.
Rogers CPA is engaged to perform bookkeeping services (a non attest
service) for an attest client. Which activity will impair Roger's independence?
A. Supervise the client's employees as they perform their normal activities
B. Post client-approve entries to the client's trial balance
C. Advise the client on current accounting issues
D. None of these would impair independence
A. Supervise the client's employees as they perform their normal activities
See slide 10. Supervising client employees in the performance of their normal
recurring activities impairs a member's independence. Posting entries is fine as long
as the client approves the entry (you're just transferring numbers to the trial balance)
and advising the client on issues is a typical nonattest service that wouldn't impair
independence.
Which activity would be least likely to create unacceptable threats to a
member's independence?
A. Consummate a translation on behalf of the client with potential investors
B. Prepare financial statements based on the client's trial balance
C. Prepare source documents for the client
, Page 4 of 116
B. Prepare financial statements based on the client's trial balance
A member may prepare financial statements from a client's trial balance without
impairing independence. It's simply taking financial statement data the client
prepared and approved and organizing it into the four statements. The other two
options were mentioned on previous slides as activities a member should not do,
since those would impair the CPA's independence. So B would be the least likely to
impair independence.
Mermaid Co. engages Olsen CPAs to help improve the operating effectiveness
of certain internal controls. Olsen also audits Mermaid's financial statements.
Which of these creates an unacceptable management participation threat to
Olsen's independence?
A. Provide research materials to Mermaid's management
B. Make recommendations to Mermaid
C. Set policy for Mermaid
C. Set policy for Mermaid
Setting policy is considered a management responsibility that the CPA must not
perform for an attest client.
Deen's CPA accepts a commission from Lara Corp, a financial statement
review client, for referring Lara to an insurer. Which statement is accurate
regarding commissions?
A. The commission is prohibited because a review client paid the fee for
Deen's referral of business to a third party
B. The commission is prohibited if the fee structure is material to Deen and will
be paid to Deen over a period of time
C. The commission is permitted if Deen discloses to Lara that I will e receiving
the fee
D. The commission is permitted because Deen does not perform an audit of
Lara's financial statements
A. The commission is prohibited because a review client paid the fee for Deen's
referral of business to a third party
Since Lara is a review client, Deen is prohibited from receiving a commission for
either (a) recommending to Lara services or products that a third party will provide,
or (b) recommending Lara's services or products to others. See slide 34 and 36.
