WGU D550 ETHICS FOR ACCOUNTANTS OBJECTIVE ASSESSMENT FINAL EXAM –
QUESTIONS AND ANSWERS | VERIFIED AND WELL DETAILED ANSWERS | PLUS
RATIONALES | GUARANTEED PASS | LATEST EXAM UPDATE
*Core Domains:*
*• AICPA Code of Professional Conduct*
*• Conceptual Framework for Members in Public Practice*
*• Integrity, Objectivity, and Independence Standards*
*• Treasury Department Circular 230 Regulations*
*• Sarbanes-Oxley Act (SOX) Compliance and Corporate Governance*
*• SEC and PCAOB Oversight Rules*
*• Whistleblower Provisions and Professional Responsibilities*
*• Ethical Decision-Making Models in Accounting*
*Introduction*
*The purpose of this objective assessment is to evaluate the student's mastery of ethical
Question 1
An auditor is offered a high-value, custom-engraved watch by an audit client’s Chief
Executive Officer to celebrate the successful completion of a complex acquisition. According
,to the AICPA Code of Professional Conduct, which threat to independence is primarily
created by this offer?
A. Self-interest threat
B. Familiarity threat
C. Undue influence threat
D. Advocacy threat
🟢 A. Option
🔴 Explanation: Accepting a high-value gift creates a self-interest threat to independence,
as it may influence the auditor's judgment to maintain a beneficial relationship with the client.
Question 2
Under Treasury Department Circular 230, what must a practitioner do upon discovering an
error or omission in a client’s previously filed federal tax return?
A. File an amended return immediately without notifying the client
B. Notify the Internal Revenue Service directly within 30 days
C. Inform the client promptly and advise them of the consequences of the error
,D. Withdraw from the engagement immediately to avoid secondary liability
🟢 C. Option
🔴 Explanation: Circular 230 requires a practitioner to advise the client promptly of any
noncompliance, error, or omission, and to explain the potential consequences under the law.
Question 3
A Certified Public Accountant (CPA) performs bookkeeping services for a non-public client
and is asked to compile the financial statements. The client’s management refuses to take
responsibility for the financial statements. Can the CPA perform the compilation?
A. Yes, provided the CPA discloses the lack of independence in the compilation report
B. No, because management must accept responsibility for the financial statements for the
CPA to perform any attest or compilation service
C. Yes, as long as the CPA does not perform an audit or review of the statements
D. No, unless the CPA obtains written authorization from the audit committee
🟢 B. Option
🔴 Explanation: Under AICPA standards, management must accept responsibility for the
financial statements and the underlying accounting policies for a CPA to perform compilation
or attest services.
, Question 4
The Sarbanes-Oxley Act of 2002 prohibits registered public accounting firms from providing
which of the following non-audit services to their public audit clients?
A. Tax compliance and preparation services
B. Corporate governance advisory services
C. Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
D. Operational consulting regarding standard business practices
🟢 C. Option
🔴 Explanation: Section 201 of the Sarbanes-Oxley Act explicitly prohibits appraisal or
valuation services, fairness opinions, or contribution-in-kind reports for public audit clients to
ensure auditor independence.
Question 5
A CPA is evaluating an ethical dilemma where two core professional values conflict.
According to the Modified Jones Ethical Decision-Making Model, what is the first step the
CPA should take?
A. Implement the chosen course of action
QUESTIONS AND ANSWERS | VERIFIED AND WELL DETAILED ANSWERS | PLUS
RATIONALES | GUARANTEED PASS | LATEST EXAM UPDATE
*Core Domains:*
*• AICPA Code of Professional Conduct*
*• Conceptual Framework for Members in Public Practice*
*• Integrity, Objectivity, and Independence Standards*
*• Treasury Department Circular 230 Regulations*
*• Sarbanes-Oxley Act (SOX) Compliance and Corporate Governance*
*• SEC and PCAOB Oversight Rules*
*• Whistleblower Provisions and Professional Responsibilities*
*• Ethical Decision-Making Models in Accounting*
*Introduction*
*The purpose of this objective assessment is to evaluate the student's mastery of ethical
Question 1
An auditor is offered a high-value, custom-engraved watch by an audit client’s Chief
Executive Officer to celebrate the successful completion of a complex acquisition. According
,to the AICPA Code of Professional Conduct, which threat to independence is primarily
created by this offer?
A. Self-interest threat
B. Familiarity threat
C. Undue influence threat
D. Advocacy threat
🟢 A. Option
🔴 Explanation: Accepting a high-value gift creates a self-interest threat to independence,
as it may influence the auditor's judgment to maintain a beneficial relationship with the client.
Question 2
Under Treasury Department Circular 230, what must a practitioner do upon discovering an
error or omission in a client’s previously filed federal tax return?
A. File an amended return immediately without notifying the client
B. Notify the Internal Revenue Service directly within 30 days
C. Inform the client promptly and advise them of the consequences of the error
,D. Withdraw from the engagement immediately to avoid secondary liability
🟢 C. Option
🔴 Explanation: Circular 230 requires a practitioner to advise the client promptly of any
noncompliance, error, or omission, and to explain the potential consequences under the law.
Question 3
A Certified Public Accountant (CPA) performs bookkeeping services for a non-public client
and is asked to compile the financial statements. The client’s management refuses to take
responsibility for the financial statements. Can the CPA perform the compilation?
A. Yes, provided the CPA discloses the lack of independence in the compilation report
B. No, because management must accept responsibility for the financial statements for the
CPA to perform any attest or compilation service
C. Yes, as long as the CPA does not perform an audit or review of the statements
D. No, unless the CPA obtains written authorization from the audit committee
🟢 B. Option
🔴 Explanation: Under AICPA standards, management must accept responsibility for the
financial statements and the underlying accounting policies for a CPA to perform compilation
or attest services.
, Question 4
The Sarbanes-Oxley Act of 2002 prohibits registered public accounting firms from providing
which of the following non-audit services to their public audit clients?
A. Tax compliance and preparation services
B. Corporate governance advisory services
C. Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
D. Operational consulting regarding standard business practices
🟢 C. Option
🔴 Explanation: Section 201 of the Sarbanes-Oxley Act explicitly prohibits appraisal or
valuation services, fairness opinions, or contribution-in-kind reports for public audit clients to
ensure auditor independence.
Question 5
A CPA is evaluating an ethical dilemma where two core professional values conflict.
According to the Modified Jones Ethical Decision-Making Model, what is the first step the
CPA should take?
A. Implement the chosen course of action
