Accounting Ethics Exam 2 With 100%
Correct And Verified Answers
Under the general rule of Integrity and Objectivity is the
interpretation of subordination of judgement - Correct
Answer-What Rules and Interpretations in the AICPA Code
are relevant to the prohibition on subordination of
judgment?
prohibits a member from knowingly misrepresenting facts of
subordinating his or her judgment when performing
professional services for a client, for an employer or on a
volunteer basis. - Correct Answer-The integrity and
objectivity rule
Supervisor or any other person within an accountants
organization - Correct Answer-Generally, to whom (or
what) might an accountant subordinate his judgment?
• Report the concern to the client's audit committee so that
the client can fix it
• Auditors have no obligation to report outside b/c they of
their obligation of confidentiality - Correct Answer-If an
independent auditor concludes that a client has engaged in
illegal activity that will have a material effect on the
financial statements, what is his obligation?
• No; must uphold client confidentiality agreement but must
report illegality to the audit committee - Correct Answer-
Generally, is an independent auditor obligated to disclose an
Vendarsol
,illegal act of his client to an outside party? Why or why not?
If not, what is the obligation of an external auditor how
discovers an illegal act of his client?
o Applies to employees of a state or local government
o Must report the illegal activity of the whistleblower's
employer or another public employee to the appropriate law
enforcement official in good faith - Correct Answer-Texas
Whistleblower Protection Act
Yes, accounting firms and legal firms - Correct Answer-Does
the Sarbanes Oxley Act protect employees of private entities
that contract with publicly traded companies from
retaliation for whistleblowing? What types of private entities
might contract with publicly traded companies?
• Reinstatement
• Monetary damages (back pay, front pay)
• General compensatory damages (pain/stress)
• Special damages (legal fees, economic damages) - Correct
Answer-What remedies are available to victims of retaliation
for whistleblowing under Sarbanes Oxley?
Reinstatement, double back pay, litigation costs and/or
attorneys' fees - Correct Answer-What remedies are
available to victims of retaliation for whistleblowing under
Dodd Frank?
• Protection from retaliation, and
• Retaliation actually occurred
o Retaliatory conduct-must be materially adverse, and
Vendarsol
, o Retaliatory motive must be established (link) - Correct Answer-
What does a plaintiff have to prove to establish retaliation?
The threat that a member will not act with objectivity because the
member's interests are opposed to the client's interests - Correct
Answer-Adverse interest threat
The threat that a member will promote a client's interests or
position to the point that his objectivity or independence is
compromised - Correct Answer-Advocacy threat
The threat that, due to a long or close relationship with a client, a
member will become too sympathetic to the client's interests or
too accepting of the client's work or product - Correct Answer-
Familiarity threat
The threat that a member will take on the role of client
management or otherwise assume management responsibilities,
such may occur during an engagement to provide non-attest
services - Correct Answer-Management participation
The threat that a member could benefit, financially or otherwise,
from an interest in, or relationship with, a client or persons
associated with the client - Correct Answer-Self-interest threat
The threat that a member will not appropriately evaluate the
results of a previous judgment made or service performed or
supervised by the member or an individual in the member's firm
and that the member will rely on that service in forming a
judgment as part of another service - Correct Answer-Self-review
threat
Vendarsol
Correct And Verified Answers
Under the general rule of Integrity and Objectivity is the
interpretation of subordination of judgement - Correct
Answer-What Rules and Interpretations in the AICPA Code
are relevant to the prohibition on subordination of
judgment?
prohibits a member from knowingly misrepresenting facts of
subordinating his or her judgment when performing
professional services for a client, for an employer or on a
volunteer basis. - Correct Answer-The integrity and
objectivity rule
Supervisor or any other person within an accountants
organization - Correct Answer-Generally, to whom (or
what) might an accountant subordinate his judgment?
• Report the concern to the client's audit committee so that
the client can fix it
• Auditors have no obligation to report outside b/c they of
their obligation of confidentiality - Correct Answer-If an
independent auditor concludes that a client has engaged in
illegal activity that will have a material effect on the
financial statements, what is his obligation?
• No; must uphold client confidentiality agreement but must
report illegality to the audit committee - Correct Answer-
Generally, is an independent auditor obligated to disclose an
Vendarsol
,illegal act of his client to an outside party? Why or why not?
If not, what is the obligation of an external auditor how
discovers an illegal act of his client?
o Applies to employees of a state or local government
o Must report the illegal activity of the whistleblower's
employer or another public employee to the appropriate law
enforcement official in good faith - Correct Answer-Texas
Whistleblower Protection Act
Yes, accounting firms and legal firms - Correct Answer-Does
the Sarbanes Oxley Act protect employees of private entities
that contract with publicly traded companies from
retaliation for whistleblowing? What types of private entities
might contract with publicly traded companies?
• Reinstatement
• Monetary damages (back pay, front pay)
• General compensatory damages (pain/stress)
• Special damages (legal fees, economic damages) - Correct
Answer-What remedies are available to victims of retaliation
for whistleblowing under Sarbanes Oxley?
Reinstatement, double back pay, litigation costs and/or
attorneys' fees - Correct Answer-What remedies are
available to victims of retaliation for whistleblowing under
Dodd Frank?
• Protection from retaliation, and
• Retaliation actually occurred
o Retaliatory conduct-must be materially adverse, and
Vendarsol
, o Retaliatory motive must be established (link) - Correct Answer-
What does a plaintiff have to prove to establish retaliation?
The threat that a member will not act with objectivity because the
member's interests are opposed to the client's interests - Correct
Answer-Adverse interest threat
The threat that a member will promote a client's interests or
position to the point that his objectivity or independence is
compromised - Correct Answer-Advocacy threat
The threat that, due to a long or close relationship with a client, a
member will become too sympathetic to the client's interests or
too accepting of the client's work or product - Correct Answer-
Familiarity threat
The threat that a member will take on the role of client
management or otherwise assume management responsibilities,
such may occur during an engagement to provide non-attest
services - Correct Answer-Management participation
The threat that a member could benefit, financially or otherwise,
from an interest in, or relationship with, a client or persons
associated with the client - Correct Answer-Self-interest threat
The threat that a member will not appropriately evaluate the
results of a previous judgment made or service performed or
supervised by the member or an individual in the member's firm
and that the member will rely on that service in forming a
judgment as part of another service - Correct Answer-Self-review
threat
Vendarsol
