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Professional Responsibilities
Professional Responsibilities MCQs
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Which of the following best describes what is meant by the term generally accepted auditing standards?
Rules acknowledged by the accounting profession because of their universal application.
Pronouncements issued by the Auditing Standards Board.
Measures of the quality of the auditor’s performance.
Procedures to be used to gather evidence to support financial statements.
?
For which of the following can a member of the AICPA receive an automatic expulsion from the AICPA? I. Member is convicted of a felony. II. Member ...
I only.
I and II only.
I and III only.
I, II, and III.
?
Which of the following is an example of a safeguard implemented by the client that might mitigate a threat to independence?
Required continuing education for all attest engagement team members.
An effective corporate governance structure.
Required second partner review of an attest engagement.
Management selection of the CPA firm
?
Which of the following is a “self review†threat to member independence?
An engagement team member has a spouse that serves as CFO of the attest client.
A second partner review is required on all attest engagements.
An engagement team member prepares invoices for the attest client.
An engagement team member has a direct financial interest in the attest client.
?
According to the standards of the profession, which of the following circumstances will prevent a CPA performing audit engagements from being indepe...
Obtaining a collateralized automobile loan from a financial institution client.
Litigation with a client relating to billing for consulting services for which the amount is immaterial.
Employment of the CPA’s spouse as a client’s director of internal audit.
Acting as an honorary trustee for a not-for-profit organization client.
?
The profession’s ethical standards most likely would be considered to have been violated when a CPA represents that specific consulting servi...
Actual fee would be substantially higher.
Actual fee would be substantially lower than the fees charged by other CPAs for comparable services.
CPA would not be independent.
Fee was a competitive bid.
?
According to the ethical standards of the profession, which of the following acts is generally prohibited?
Issuing a modified report explaining a failure to follow a governmental regulatory agency’s standards when conducting an attest service for a client.
Revealing confidential client information during a quality review of a professional practice by a team from the state CPA society.
Accepting a contingent fee for representing a client in an examination of the client’s federal tax return by an IRS agent.
Retaining client records after an engagement is terminated prior to completion and the client has demanded their return.
?
May a CPA hire for the CPA’s public accounting firm a non- CPA systems analyst who specializes in developing computer systems?
Yes, provided the CPA is qualified to perform each of the specialist’s tasks.
Yes, provided the CPA is able to supervise the specialist and evaluate the specialist’s end product.
No, because non-CPA professionals are not permitted to be associated with CPA firms in public practice.
No, because developing computer systems is not recognized as a service performed by public accountants.
?
Stephanie Seals is a CPA who is working as a controller for Brentwood Corporation. She is not in public practice. Which statement is true?
She may use the CPA designation on her business cards if she also puts her employment title on them.
She may use the CPA designation on her business cards as long as she does not mention Brentwood Corporation or her title as controller.
She may use the CPA designation on company transmittals but not on her business cards.
She may not use the CPA designation because she is not in public practice.
?
According to the standards of the profession, which of the following activities would most likely not impair a CPA’s independence?
Providing advisory services for a client.
Contracting with a client to supervise the client’s office personnel.
Signing a client’s checks in emergency situations.
Accepting a luxurious gift from a client.
?
Which of the following reports may be issued only by an accountant who is independent of a client?
Standard report on an examination of a financial forecast.
Report on consulting services.
Compilation report on historical financial statements.
Compilation report on a financial projection.
?
Larry Sampson is a CPA and is serving as an expert witness in a trial concerning a corporation’s financial statements. Which of the following...
I only
I and II only.
I and III only.
III only.
?
According to the ethical standards of the profession, which of the following acts is generally prohibited?
Purchasing a product from a third party and reselling it to a client.
Writing a financial management newsletter promoted and sold by a publishing company.
Accepting a commission for recommending a product to an audit client.
Accepting engagements obtained through the efforts of third parties.
?
To exercise due professional care an auditor should
Critically review the judgment exercised by those assisting in the audit.
Examine all available corroborating evidence supporting managements assertions.
Design the audit to detect all instances of illegal acts.
Attain the proper balance of professional experience and formal education.
?
To exercise due professional care an auditor should
Critically review the judgment exercised by those assisting in the audit.
Examine all available corroborating evidence supporting managements assertions.
Design the audit to detect all instances of illegal acts.
Attain the proper balance of professional experience and formal education.
?
Kar, CPA, is a staff auditor participating in the audit engagement of Fort, Inc. Which of the following circumstances impairs Kar’s independe...
During the period of the professional engagement, Fort gives Kar tickets to a football game worth $75.
Kar owns stock in a corporation that Fort’s 401(k) plan also invests in.
Kar’s friend, an employee of another local accounting firm, prepares Fort’s tax returns.
Kar’s sibling is director of internal audit at Fort.
?
On June 1, 20X8, a CPA obtained a $100,000 personal loan from a financial institution client for whom the CPA provided compilation services. The loa...
Yes, because the loan was fully secured.
Yes, because the CPA was not required to be independent at the time the loan was granted.
No, because the CPA had a loan with the client during the period of a professional engagement.
No, because the CPA had a loan with the client during the period covered by the financial statements.
?
Which of the following statements is(are) correct regarding a CPA employee of a CPA firm taking copies of information contained in client files when...
I only.
II only.
Both I and II.
Neither I nor II.
?
Which of the following statements is correct regarding an accountant’s working papers?
The accountant owns the working papers and generally may disclose them as the accountant sees fit.
The client owns the working papers but the accountant has custody of them until the accountant’s bill is paid in full.
The accountant owns the working papers but generally may not disclose them without the client’s consent or a court order.
The client owns the working papers but, in the absence of the accountant’s consent, may not disclose them without a court order.
?
Which of the following is an authoritative body designated to promulgate attestation standards?
Auditing Standards Board.
Governmental Accounting Standards Board.
Financial Accounting Standards Board
General Accounting Office.
?
According to the standards of the profession, which of the following events would require a CPA performing a consulting services engagement for a no...
I only.
II only.
Both I and II.
Neither I nor II.
?
Which of the following services may a CPA perform in carrying out a consulting service for a client? I. Analysis of the client’s accounting s...
I and II only.
I and III only.
II and III only.
I, II, and III.
?
Under the Statements on Standards for Consulting Services, which of the following statements best reflects a CPA’s responsibility when undert...
Not seek to modify any agreement made with the client.
Not perform any attest services for the client.
Inform the client of significant reservations concerning the benefits of the engagement.
Obtain a written understanding with the client concerning the time for completion of the engagement.
?
Which of the following services is a CPA generally required to perform when conducting a personal financial planning engagement?
Assisting the client to identify tasks that are essential in order to act on planning decisions.
Assisting the client to take action on planning decisions.
Monitoring progress in achieving goals.
Updating recommendations and revising planning decisions.
?
Under the Sarbanes-Oxley Act, most audit working papers must be saved
5 years.
7 years.
10 years.
Indefinitely as there is no time limitation provided.
?
Passage of the Sarbanes-Oxley Act led to the establishment of the
Auditing Standards Board.
Accounting Enforcement Releases Board.
Public Company Accounting Oversight Board.
Securities and Exchange Commission
?
Under Title II of the Sarbanes-Oxley Act, the auditor of an issuer cannot legally perform which type of service for that issuer?
Tax services.
Review of interim information.
Internal audit outsourcing services.
Audit of internal control over financial reporting
?
The audit partner in charge of an audit of a public company may only
Be in charge of the audit of that one company.
Perform the role as long as he or she also performs the “second partner review†for that audit.
Perform that role for five consecutive years.
Perform the role if he or she has proper AICPA issuer accreditation.
?
Which of the following is correct concerning membership on the Public Company Accounting Oversight Board?
Only two of its members may be CPAs.
It is composed of 9 members.
All members must also currently be active in public accounting.
A majority of members must be or have been accounting educators.
?
The Public Company Accounting Oversight Board (PCAOB) is not responsible for standards related to
Accounting.
Attestation.
Auditing
Quality control
?
A PCAOB engagement that focuses on a selected quality control issue is most likely to be referred to as a(n)
Financial statement audit.
Inspection.
Peer review
Quality control
?
Which statement below is correct concerning communicating the results of a PCAOB inspection?
The entire report issued by the PCAOB is publicly available.
The portion of the report issued on a CPA firm’s quality control is not ordinarily publicly available.
The report issued is only available to Congress.
The report is available only to PCAOB members.
?
In relation to the AICPA Code of Professional Conduct, the IFAC Code of Ethics for Professional Accountants
Has more outright prohibitions.
Has fewer outright prohibitions.
Has no outright prohibitions.
Applies only to professional accountants in business.
?
Based on the IFAC Code of Ethics for Professional Accountants, threats to independence arise from all of the following except:
Self interest.
Advocacy
The audit relationship.
Intimidation.
?
If an audit firm discovers threats to independence with respect to an audit engagement, the IFAC Code of Ethics for Professional Accountants indicat...
Immediately resign from the engagement.
Notify the appropriate regulatory body.
Document the issue.
Evaluate the significance of the threats and apply appropriate safeguards to reduce them to an acceptable level.
?
With respect to the acceptance of contingent fees for professional services, the IFAC Code of Ethics for Professional Accountants indicates that the...
Should not accept contingent fees.
Should establish appropriate safeguards around acceptance of a contingent fee.
Should accept contingent fees only for assurance services other than audits of financial statements.
Should accept contingent fees if it is customary in the country.
?
With regard to marketing professional services, the IFAC Code of Ethics for Professional Accountants indicates that
Direct marketing is prohibited.
Marketing is allowed if lawful.
Marketing should be honest and truthful.
Marketing of audit services is prohibited.
?
What body establishes international auditing standards?
The Public Company Accounting Oversight Board.
The International Federation of Accountants.
The World Bank.
The International Assurance Body.
?
Which of the following is not true about international auditing standards?
International auditing standards do not require an audit of internal control.
International auditing standards do not allow reference to division of responsibilities in the audit report.
International auditing standards require obtaining an attorney’s letter.
International auditing standards are based on a risk assessment approach.
?
Which of the following is most likely to be required in an audit performed in conformity with international auditing standards?
Confirmation of accounts receivable.
Audit report modification for a change in accounting principles.
An opinion on internal control.
Audit report inclusion of the location in which the auditor practices.
?
Independence standards of the GAO for audits in accordance with generally accepted government auditing standards describe three types of impairments...
Personal.
Organizational.
External.
Unusual.
?
In accordance with the independence standards of the GAO for performing audits in accordance with generally accepted government auditing standards, ...
Reducing the extent of audit work due to pressure from management to reduce audit fees.
Selecting audit items based on the wishes of an employee of the organization being audited.
Bias in the items the auditors decide to select for testing.
Influence by management on the personnel assigned to the audit
?
Under the independence standards of the GAO for performing audits in accordance with generally accepted government auditing standards, which of the ...
I only.
I and II only.
I, II and III.
II and III only.
?
Which of the following bodies enforce the audit requirements of the Employee Retirement Security Act of 1974 (ERISA) with respect to employee benefi...
The Department of Labor.
The Department of Pension Management.
The Securities and Exchange Commission.
The Public Company Accounting Oversight Board.
?
The requirement for independence by the auditor regarding audits of employee benefit plans apply to the plan as well as
Investment companies doing business with the plan.
Members of the plan.
The plan sponsor.
The actuary firm doing services for the plan.
?
Which of the following is/are reasons for an individual to set up a trust for estate planning purposes? I. To avoid probate. II. To reduce estate pl...
I only
I & II only
I & III only
I, II, & III
?
Generally speaking, a financial planner is expected to carry out which of the following activities in his client’s will-making process? I. To...
I only
I & II only
I & III only
II & III only
?
Mathew is 50 years old and single. He was employed for over 14 years as a full-time chef of a restaurant. However, Mathew had a car accident 3 months...
I only
I & II only
I & III only
II & III only
?
Which of the following is prohibited by the Foreign Corrupt Practices Act?
The payment for U.S. exports in currency other than U.S. dollars.
The offer of payment to foreign officials to obtain business.
The purchase by foreigners of strategic assets from the U.S.
The payment of U.S. funds to any regime not recognized by the U.S. Department of State.
