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PK Accn Ethic 01

“Do that action which will bring about the greatest good for the greatest number of people,”
is the basic concept of which ethical theory?

egoism
deontology
utilitarianism
virtue ethics

“Do that action which will bring about the greatest good for the greatest number of people,”
is the basic concept of which ethical theory?

utilitarianism

Each of the following characteristics describes the importance of integrity in decision
making except for:

Acting out of moral principle
Being loyal to one’s superior
Having the courage to do the right thing
Not subordinating professional judgment to others

Each of the following characteristics describes the importance of integrity in decision
making except for:

Being loyal to one’s superior

Each of the following is an element of trustworthiness according to the Josephson Institute
except for:

Reliability
Loyalty
Fairness
Honesty

Each of the following is an element of trustworthiness according to the Josephson Institute
except for:

Fairness

Eddie paid an $8 restaurant check with a $10 bill. The waitress gave him $12 back. The
most ethical action for Eddie is to:

Keep the extra $10

Inform the waitress of her overpayment

Inform the manager of the restaurant of the overpayment

Leave a larger tip for the waitress

Eddie paid an $8 restaurant check with a $10 bill. The waitress gave him $12 back. The
most ethical action for Eddie is to:

Inform the waitress of her overpayment

Ethical relativism can best be described as a:

Point of view that morality is relative to the norms of one’s culture.

Concept that holds that integrity should be maintained in the face of pressure by others.

An ethical reasoning method that holds one should always act out of selfinterest.

An ethical reasoning method that holds one should always consider the effect of one’s actions on others.

Ethical relativism can best be described as a:

Point of view that morality is relative to the norms of one’s culture.

George is in the middle of a high stakes poker game when he notices what he thinks is cheating by another player. It appears to George that this player took a card from his lap
and switched it with a card that he was dealt. If George is a utilitarian thinker, he should:

Accuse the alleged cheater of cheating in front of all the other players

Consider what might happen if he accuses the player of cheating and he is wrong

Speak to the alleged cheater during a regularly scheduled break and tell him not to do it again

Forget about the whole matter

George is in the middle of a high stakes poker game when he notices what he thinks is cheating by another player. It appears to George that this player took a card from his lap
and switched it with a card that he was dealt. If George is a utilitarian thinker, he should:

Consider what might happen if he accuses the player of cheating and he is wrong

Greatest good for the greatest number of people is the theory of.

Rights
Deontology
Utilitarianism
Justice

Greatest good for the greatest number of people is the theory of.

Utilitarianism

If one’s reputation is tainted it may create a:

Conflict of interests
Loss of independence
Lack of trust
All of these

If one’s reputation is tainted it may create a:

Lack of trust

Jane finds a material misstatement while auditing a client’s accounts receivables. Her senior tells her to ignore the misstatement so that the client does not get upset. Jane wants to be viewed as a team player in order to advance in the firm. So Jane follows her senior’s
instructions and ignores the misstatement. Which ethical theory did Jane use to make her decision?

Egoism
Justice
Virtue ethics
Utilitarianism

Jane finds a material misstatement while auditing a client’s accounts receivables. Her senior tells her to ignore the misstatement so that the client does not get upset. Jane wants to be viewed as a team player in order to advance in the firm. So Jane follows her senior’s
instructions and ignores the misstatement. Which ethical theory did Jane use to make her decision?

Egoism

tính ích k?

Kelly is the controller of a small company. One day the CFO comes in and tells her to lower the estimate of uncollectible accounts receivable. Kelly insists her numbers are correct as is. The CFO tells her it will mean her job at the company if she doesn’t go along with the
smaller estimate. The primary virtue that would enable Kelly to resist the pressure to manipulate the number is:

Loyalty
Integrity
Caring
Civic responsibility

Kelly is the controller of a small company. One day the CFO comes in and tells her to lower the estimate of uncollectible accounts receivable. Kelly insists her numbers are correct as is. The CFO tells her it will mean her job at the company if she doesn’t go along with the
smaller estimate. The primary virtue that would enable Kelly to resist the pressure to manipulate the number is:

Integrity

Objectivity requires that a CPA should:

Maintain a mental attitude of impartiality
Maintain a mental attitude of intellectual honesty
Be free of conflicts of interest
All of these

Objectivity requires that a CPA should:

Selected Answer: All of these

Respect is an important character of behavior because:

It encompasses attributes of how we should treat others

It entails a loyalty obligation to one’s superior

It enables one to perform professional services competently

It is critical to maintaining one’s integrity

Respect is an important character of behavior because:

It encompasses attributes of how we should treat others

Steve is deep in debt due to a gambling problem. He is the bookkeeper for a family owned business, Cal Poly Greenery. The company has only three employees Steve,
the husband, and the wife. All three have been friends for many years. One day the loan shark who lent Steve $20,000 comes knocking at his door asking for repayment of the loan. Steve convinces the loan shark to give him another day. The following day Steve writes a check
on the company’s books to himself for $20,000. Since he reconciles the bank accounts and prepares the financial statements, Steve knows it’s unlikely the owners will ever know about what he has done. From an ethical perspective, Steve has

Violated the trust placed in him by the owners

Risked his reputation if the owners find out

Compromised his integrity

All of these

Steve is deep in debt due to a gambling problem. He is the bookkeeper for a family owned business, Cal Poly Greenery. The company has only three employees Steve,
the husband, and the wife. All three have been friends for many years. One day the loan shark who lent Steve $20,000 comes knocking at his door asking for repayment of the loan. Steve convinces the loan shark to give him another day. The following day Steve writes a check
on the company’s books to himself for $20,000. Since he reconciles the bank accounts and prepares the financial statements, Steve knows it’s unlikely the owners will ever know about what he has done. From an ethical perspective, Steve has

All of these

The ancient Greeks thought of the virtues as characteristics of behavior that:

Could lead to a good life
Make up the “six pillars of character”
Support the rights theory
All of these

The ancient Greeks thought of the virtues as characteristics of behavior that:

Could lead to a good life

The country with the highest Power Distance score is

Russia
United States
United Kingdom
Japan

The country with the highest Power Distance score is

Russia

The credibility standard in the Statement of Ethical Professional Practice of the IMA requires that an accounting professional should:

Communicate information fairly and objectively

Disclose all relevant information that might affect the intended user’s understanding of the reports, analyses or recommendations

Disclose delays or deficiencies in information, timeliness, processing or internal controls in conformance with organization policy and the law

All of these

The credibility standard in the Statement of Ethical Professional Practice of the IMA requires that an accounting professional should:

All of these

The ethical reasoning method that is based on treating equals, equally and unequals, unequally is:

Enlightened egoism
Act utilitarianism
Justice
Virtue

The ethical reasoning method that is based on treating equals, equally and unequals, unequally is:

Justice

The method of ethical reasoning that does not deal with making decisions after considering the interests of others is:

Egoism
Enlightened Egoism
Utilitarianism
Rights Theory

The method of ethical reasoning that does not deal with making decisions after considering the interests of others is:

Egoism

The method of ethical reasoning that requires selecting the correct moral rule that produces the greatest benefits over harms is:

Act Utilitarianism
Rule Utilitarianism
Rights Theory
Justice

The method of ethical reasoning that requires selecting the correct moral rule that produces the greatest benefits over harms is:

Rule Utilitarianism

The most important duty of public accounting is to the:

Securities Exchange Commission
Current stockholders
Management
Investing public

The most important duty of public accounting is to the:

Investing public

Treating other fairly encompasses treating them:

Equally, impartially, and responsibly

Equally, responsibly, and openly

Impartially, openly, and diligently

Equally, impartially, and openly

Treating other fairly encompasses treating them:

Equally, impartially, and openly

Virtue ethics is

Doing what is right

One’s duty to act in a socially acceptable manner

One’s ability to meet or exceed their potential

What one ought to do when presented with an ethical dilemma

Virtue ethics is

Doing what is right

What is the one virtue that people should want in a boss to trust the boss?

Diligence
Commitment
Honesty
Sense of humor

What is the one virtue that people should want in a boss to trust the boss?

Honesty

When an employee is given a job evaluation, he has a right to expect

Fair, but honest evaluations
Glowing reports
360 degree evaluations from everyone in the firm
Evaluations of technical, not personal skills

When an employee is given a job evaluation, he has a right to expect

Fair, but honest evaluations

When is it appropriate to contact the audit committee about a difference of opinion with the CFO over an accounting or financial reporting manner?

If the CFO does not agree to correct the financial statements

The CEO supports the CFO and does not agree to correct the financial statements

The external auditors support the CEO and do not agree to correct the financial statements

The audit committee should always be the first to be informed about such a difference of opinion

When is it appropriate to contact the audit committee about a difference of opinion with the CFO over an accounting or financial reporting manner?

The CEO supports the CFO and does not agree to correct the financial statements

Which theory is based on doing what is right despite the consequences?

Deontology
Virtue ethics
Teleology
Egoism

Which theory is based on doing what is right despite the consequences?

Deontology

Your manager asks you to “cook the books” to support a loan application at the local bank. The manager insists it is a onetime request. If you are a person of integrity, what should you do?

Go along with the manager’s request

Talk to others in the company to determine how they handled such situations

Refuse to go along with the request

Inform the audit committee

Your manager asks you to “cook the books” to support a loan application at the local bank. The manager insists it is a onetime request. If you are a person of integrity, what should you do?

Refuse to go along with the request

# 2
At which stage of Kohlberg’s view on ethical development is an individual’s actions influenced by group norms?

Stage 1
Stage 2
Stage 3
Stage 4

At which stage of Kohlberg’s view on ethical development is an individual’s actions influenced by group norms?

Stage 3

Each of the following considerations should help to evaluate alternative courses of action in the decision making model except for:

Whether the alternatives are consistent with professional standards

Whether the alternatives are consistent with firm policies and its own code of ethics

The stage of moral development of the decision maker

The potential harms and benefits of alternative courses of action

Each of the following considerations should help to evaluate alternative courses of action in the decision making model except for:

The stage of moral development of the decision maker

In Thorne’s model of ethical decision making, the instrumental virtues relate to:

Moral sensitivity
Ethical reasoning
Ethical motivation
Ethical character

In Thorne’s model of ethical decision making, the instrumental virtues relate to:

Ethical character

In reference to Rest’s four component
Model of Morality, which component reflects an
individual’s willingness to place ethical values ahead of non ethical values that relate to self interest?

Moral Character
Moral Motivation
Moral Sympathy
Moral Judgment

In reference to Rest’s four component
Model of Morality, which component reflects an
individual’s willingness to place ethical values ahead of non ethical values that relate to self interest?

Moral Motivation

In stage 3 of Kohlberg’s model, ethical reasoning is motivated by:

Satisfaction of one’s needs
Acting in the best interests of others
Upholding the rights, values, and legal contracts of society
Acting based on universal principles

In stage 3 of Kohlberg’s model, ethical reasoning is motivated by:

Acting in the best interests of others

Individuals who reason at stage 6 incorporate ethical reasoning based on:

The morality of law and duty to the social order

A rational calculation of benefits and harms to society

Universal ethical principles

All of these

Individuals who reason at stage 6 incorporate ethical reasoning based on:

All of these

James Rest’s model of ethical action involves four components inherent to the ethical decision making
process. Which of the following relates to a person’s moral judgment?

Interpreting a situation as a moral dilemma

Willingness to place ethical values ahead of nonethical
values

Intention to act ethically aligning to his values

Outcome of one’s prescriptive reasoning

James Rest’s model of ethical action involves four components inherent to the ethical decision making
process. Which of the following relates to a person’s moral judgment?

Outcome of one’s prescriptive reasoning

Keesha is the CEO of a publiclyowned
company. She was informed by the CFO that the
company’s earnings were down 30 percent from the prior year due to the recession. The company’s stock price has declined by 20 percent. The CFO comes up with a scheme to hide debt and inflate revenues by selling under performing assets to a special purpose entity affiliated with the company. Keesha is concerned about possible effects on the creditors but ultimately she agrees to the accounting. Keesha is reasoning at:

Stage 1
Stage 2
Stage 3
Stage 4

Keesha is the CEO of a publiclyowned
company. She was informed by the CFO that the
company’s earnings were down 30 percent from the prior year due to the recession. The company’s stock price has declined by 20 percent. The CFO comes up with a scheme to hide debt and inflate revenues by selling under performing assets to a special purpose entity affiliated with the company. Keesha is concerned about possible effects on the creditors but ultimately she agrees to the accounting. Keesha is reasoning at:

Stage 2

Kohlberg’s model can best be described as:

The various phases in one’s moral development and related levels of moral reasoning

A model of ethical action that is based on one’s moral development

A predictive tool to determine how a person will reason ethically based on one’s moral development

A model of agespecific levels of moral reasoning

Kohlberg’s model can best be described as:

The various phases in one’s moral development and related levels of moral reasoning

Rest’s “Four Component Model of Morality” can best be described as:

A description of the values that influence ethical decision making

A model of the relationship between ethical action and one’s level of moral development

A model of moral judgment based on one’s possession of certain virtues of behavior

All of these

Rest’s “Four Component Model of Morality” can best be described as:

A model of the relationship between ethical action and one’s level of moral development

Rest’s components of a moral model include all but

Moral sensitivity
Moral development
Moral judgment
Moral character

Rest’s components of a moral model include all but

Moral development

Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures less than $1,000 must be expensed. Steve decides to take a $900 expenditure and separate $600 one and combine them into one
$1,500 expenditure so that the total can be capitalized thereby eliminating the effects on income. Steve’s actions can be characterized as:

Lacking in of moral sensitivity
Lacking in professional skepticism
Loyal to the company’s best interests
All of these

Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures less than $1,000 must be expensed. Steve decides to take a $900 expenditure and separate $600 one and combine them into one
$1,500 expenditure so that the total can be capitalized thereby eliminating the effects on income. Steve’s actions can be characterized as:

Lacking in of moral sensitivity

The ethical domain in accounting and auditing refers to:

The important constituent groups affected by accounting and auditing work

The stages of the moral development of accountants and auditors

The decision making process followed by accountants and auditors

All of these

The ethical domain in accounting and auditing refers to:

The important constituent groups affected by accounting and auditing work

The importance of framing the ethical issue in the decision making model is:

Identify the stakeholders affected by intended actions

Evaluating alternative courses of action using moral reasoning methods

Identify the accounting issues present in a case

Providing a perspective to apply the decision making model to specific facts of the case

The importance of framing the ethical issue in the decision making model is:

Providing a perspective to apply the decision making model to specific facts of the case

What are the implications of reasoning at stages 3 and 4?

A CPA unable to apply technical accounting standards is unlikely to be influenced by others.

A CPA is unlikely to be influenced by rules or authority.

A CPA is unlikely to be influenced or give into pressures.

A CPA unable to apply technical accounting standards is likely to be influenced by others.

What are the implications of reasoning at stages 3 and 4?

A CPA unable to apply technical accounting standards is likely to be influenced by others.

What needs to be coupled with moral motivation to act on moral judgment?

Courage
External pressures
Loyalty
Internal pressures

What needs to be coupled with moral motivation to act on moral judgment?

Courage

Each of the following is an ethical issue in business except for:

Honesty and fairness
Independence
Conflicts of interest
Fraud

Each of the following is an ethical issue in business except for:

Independence

Fraud can be defined as:

A deliberate misrepresentation to gain an advantage over another party

A coverup of a mistake made in the financial statements

An error in preparing financial statements

All of these

Fraud can be defined as:

A deliberate misrepresentation to gain an advantage over another party

In the Ethical Dissonance Model, a high person organization fit requires:

High organizational ethics, low individual ethics
High organizational ethics, high individual ethics
Low organizational ethics, high individual ethics
Low organizational ethics, low individual ethics

In the Ethical Dissonance Model, a high person organization fit requires:

High organizational ethics, high individual ethics

A unique aspect of occupational fraud is:

The misuse of company assets
The falsification of financial statements
The failure to disclose full and complete information
All of these

A unique aspect of occupational fraud is:

The misuse of company assets

According to the 2012 Global fraud Study of the ACFE, the most common method of initial detection of occupational fraud is:

Internal audit
Management review
External audit
Tip

According to the 2012 Global fraud Study of the ACFE, the most common method of initial detection of occupational fraud is:

Tip

Each of the following is a pillar of corporate governance except for:

Responsibility
Accountability
Fairness
Independence

Each of the following is a pillar of corporate governance except for:

Independence

The Agency Theory can best be described as:

The relationship between top management and the board of directors

The relationship between the board of directors and shareholders

The relationship between top management and the board of directors, and shareholders

The relationship between the external auditors and top management

The Agency Theory can best be described as:

The relationship between top management and the board of directors, and shareholders

The stakeholder view emphasizes the obligations of management to:

The shareholders

The shareholders and creditors

All parties impacted by corporate decisions in a significant way

The board of directors

The stakeholder view emphasizes the obligations of management to:

All parties impacted by corporate decisions in a significant way

The level of care expected of a reasonable person under similar circumstances in meeting one’s fiduciary duty is called:

Duty of loyalty
Duty of care
Transparency
All of these

The level of care expected of a reasonable person under similar circumstances in meeting one’s fiduciary duty is called:

Duty of care

An ethical corporate culture can best be established by:

Setting a proper tone at the top
Establishing strong internal controls
Having an effective internal audit function
All of these

An ethical corporate culture can best be established by:

All of these

The ethical dissonance model looks at the ethical fit of the organizational and individual values. The optimal fit for an individual with high individual ethics would be:

High High
High Low
Low High
Low Low

The ethical dissonance model looks at the ethical fit of the organizational and individual values. The optimal fit for an individual with high individual ethics would be:

High High

A seemingly positive result of the 2011 National Business Ethics Survey is:

The percentage of employees who had reported misconduct at work is increasing

Pressure to compromise ethical standards has been decreasing

The rate of retaliation against whistle blowers has been decreasing

The percentage of employees who said they could question management without fear of retaliation is decreasing

A seemingly positive result of the 2011 National Business Ethics Survey is:

The percentage of employees who had reported misconduct at work is increasing

The 2011 National Business Ethics Survey indicates each of the following with respect to how employees view the ethics and ethical practices of organizations they work for except for:

Misconduct at work has declined over the years

Whistle blowing is up

Ethical cultures are weaker

Pressure to cut corners is lower

The 2011 National Business Ethics Survey indicates each of the following with respect to how employees view the ethics and ethical practices of organizations they work for except for:

Ethical cultures are weaker

A reason that Bernie Madoff was able to pull off the Ponzi scheme for so long was:

He was trusted by those who invested with him

The SEC failed to act on tips about Madoff’s questionable practices

The auditors either looked the other way or didn’t look too hard to find the fraud

All of these.

A reason that Bernie Madoff was able to pull off the Ponzi scheme for so long was:

All of these.

The COSO report states that management should enact five components related to internal control objectives including each of the following except for:

Control environment
Risk assessment
Risk activities
Monitoring

The COSO report states that management should enact five components related to internal
control objectives including each of the following except for:

Risk activities

Which of the following is not an ethical issue in business?

Conflicts of interest
Maximization of profits
Discrimination
Information technology

Which of the following is not an ethical issue in business?

Maximization of profits

Which is a questionable ethical work behavior of an employee?

Handing in all assignments on time.

Taking time off without pay to attend to a family crisis.

Using social media during the work day to update your Facebook page.

Giving your best effort during work time.

Which is a questionable ethical work behavior of an employee?

Using social media during the work day to update your Facebook page.

What is the agency problem?

Managers place corporate goals ahead of personal goals.

Managers place personal goals ahead of corporate goals.

Managers place social goals ahead of personal goals.

Managers place corporate goals ahead of social goals.

What is the agency problem?

Managers place personal goals ahead of corporate goals.

Which of the following is not used to overcome the agency problem?

Executive compensation
Audited financial statements
Related party transactions
Internal controls

Which of the following is not used to overcome the agency problem?

Related party transactions

The 2010 DoddFrankAct includes additional incentives for whistleblowers. What is the act’s effect on whistleblowing by accountants?

No accountant, internal or external, whether by job title or certification may receive a reward.

All accountants who whistleblow are protected against retaliation.

Internal auditors who whistleblow may receive a reward.

A CPA may report a violation of a public accounting firm’s performance in an audit.

The 2010 DoddFrankAct includes additional incentives for whistleblowers. What is the act’s effect on whistleblowing by accountants?

A CPA may report a violation of a public accounting firm’s performance inan audit.

The relationship between the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy and rule of law is known as

Code of ethics
Corporate sustainability
Corporate responsibility
Corporate governance

The relationship between the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy and rule of law is known as

Corporate governance

The most important values included in corporate values statements include:

Pursuit of selfinterests

Commitment to beating the competition

Diversity

Integrity and ethical behavior

The most important values included in corporate values statements include:

Integrity and ethical behavior

To whom does the management owe its ultimate allegiance?

Employees
Creditors
Shareholders
Government

To whom does the management owe its ultimate allegiance?

Shareholders

A similarity between the Bernie Madoff situation and that of R. Allen Stanford is they both were:

The head of a major U.S. stock exchange

The CEO of a company that went out of business after a major financial statement fraud

Involved in Ponzi schemes

Exonerated in a trial because of lack of evidence of wrongdoing

A similarity between the Bernie Madoff situation and that of R. Allen Stanford is they both were:

Involved in Ponzi schemes

An ethical organization incorporates what into their decision making process:

Core values
Strategic policies
Reporting responsibilities
All of these

An ethical organization incorporates what into their decision making process:

All of these

The primary ethical concern when contemplating whistleblowing as an accountant is:

It may violate my ethical obligations

It may fail to correct the matter

It may not be considered ethical by my employer

All of these

The primary ethical concern when contemplating whistleblowing as an accountant is:

It may violate my ethical obligations

Each of the following were themes of the investigations of the accounting profession during the 1970s and 1980s except for:

Whether low balling to obtain audits impairs independence

Whether nonaudit services impair auditor independence

The need for a report on internal controls

The importance of developing techniques to prevent and detect fraud

Each of the following were themes of the investigations of the accounting profession during the 1970s and 1980s except for:

Whether low balling to obtain audits impairs independence

The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at:

ESM Government Securities

Continental Illinois National Bank and Trust

Penn Square Bank

All of these

The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at:

All of these

In its investigation of ZZZZ Best, the House Subcommittee on Oversight and Investigations looked into:

Why the board of directors failed to uncover the fraud at ZZZZ Best

How the company was able to create 80% or more fictitious revenue

How the company was able to create cookie jar reserves

All of these

In its investigation of ZZZZ Best, the House Subcommittee on Oversight and Investigations looked into:

How the company was able to create 80% or more fictitious revenue

The cost to the public to clean up 1,043 failed savings and loan institutions during the period of 1986- 1995 was:

$152.9 billion including $123.8 billion of U.S. taxpayer losses

$300 million including $123.8 million of U.S. taxpayer losses

$400 billion including $152.9 billion of U.S. taxpayer losses

$400 million including $152.9 billion of U.S. taxpayer losses

The cost to the public to clean up 1,043 failed savings and loan institutions during the period of 1986- 1995 was:

$152.9 billion including $123.8 billion of U.S. taxpayer losses

One of the Contributions of the Treadway Commission Report and the work of the Committee of Sponsoring Organizations (COSO) was:

To establish a voluntary process for peer review

To identify red flags that might lead to fraud

To identify the tone at the top for management to create an ethical culture

All of these

One of the Contributions of the Treadway Commission Report and the work of the Committee of Sponsoring Organizations (COSO) was:

To identify the tone at the top for management to create an ethical culture

James Doty, the chairman of the PCAOB, in his testimony before Congress on the financial crisis of 2007 2008,
admitted that auditors should have been more vigilant—not just at Lehman Brothers, but across the board. Which audit areas did Doty signal out for criticism?

Inventories and cash flow

Capital and operating expenses

Special purpose and related party entities

Valuations and end of period transactions

James Doty, the chairman of the PCAOB, in his testimony before Congress on the financial crisis of 2007 2008,
admitted that auditors should have been more vigilant—not just at Lehman Brothers, but across the board. Which audit areas did Doty signal out for criticism?

Valuations and end of period transactions

The ethics rules that applies solely to those who conduct an audit of a client entity is:

Independence
Objectivity
Integrity
All of these

The ethics rules that applies solely to those who conduct an audit of a client entity is:

Independence

The conceptual framework for the AICPA Independence standards can best be characterized as:

A model to prevent fraud from occurring

An approach to identify threats to independence

An approach to identify fraud risks

A model to assist controllers in dealing with differences of opinion with top management on accounting issues

The conceptual framework for the AICPA Independence standards can best be characterized as:

An approach to identify threats to independence

In the ESM fraud discussed in this chapter, Jose Gomez violated the Independence standard because he:

Had loans outstanding from the client

Engaged in a business relationship with the client

Had family members who owned stock directly in the
client

All of these

In the ESM fraud discussed in this chapter, Jose Gomez violated the Independence standard because he:

Had loans outstanding from the client

To avoid violating independence when engaged in nonattest services for an audit client, a CPA must:

Make all management decisions and perform all management decisions

Evaluate the adequacy and results of the services performed

Avoid being biased when providing nonattest services for the audit client

Avoid being pressured by the client when providing nonattest services for the audit client

To avoid violating independence when engaged in non attest services for an audit client, a CPA must:

Avoid being biased when providing nonattest services for the audit client

Under the Sarbanes Oxley Act, the auditor’s responsibility with respect to internal controls can best be stated as:

Develop a system of internal controls that helps to prevent and detect fraud

Assess whether the internal controls helps to prevent and detect fraud

Assess management’s report on internal controls

All of these

Under the Sarbanes Oxley Act, the auditor’s responsibility with respect to internal controls can best be stated as:

Assess management’s report on internal controls

The due care principle in the AICPA code:

Addresses the quality of the individual who performs professional services

Addresses the quality of services performed by the CPA

Addresses whether the independence standards has been met

All of these

The due care principle in the AICPA code:

Addresses the quality of services performed by the CPA

The confidentiality standard in the AICPA code provides for exceptions to the rule in:

In response to a validly issued court summons

To provide information to the CPA’s peer reviewers

To defend oneself in an ethics investigation

All of these

The confidentiality standard in the AICPA code provides for exceptions to the rule in:

All of these

In the Fund of Funds case discussed in this chapter, the external auditors violated which rule of conduct?

Due care

The financial statements were certified as being in conformity with GAAP when that was not the case

The financial statements were certified as being in conformity with generally accepted auditing standards when that was not the case

Confidentiality

In the Fund of Funds case discussed in this chapter, the external auditors violated which rule of conduct?

Confidentiality

If a client refuses to accept an auditors’ report that has been modified, the public accounting firm should withdraw from the engagement and give its reasons in writing to the board of directors except when:

The auditor is unable to obtain sufficient appropriate evidence about a suspected illegal act

The client fails to account for or disclose properly a material amount connected with an illegal act

The auditor is unable to estimate amounts involved in an illegal act

The auditor is unable to observe the physical inventory

If a client refuses to accept an auditors’ report that has been modified, the public accounting firm should withdraw from the engagement and give its reasons in writing to the board of directors except when:

The auditor is unable to observe the physical inventory

A CPA can accept a contingent fee in providing tax services for an attest client if:

The CPA discloses this fact to the tax client

The CPA receives the permission of the client to accept such a form of payment

The CPA’s tax services will be reviewed by a taxing authority

All of these

A CPA can accept a contingent fee in providing tax services for an attest client if:

The CPA’s tax services will be reviewed by a taxing authority

CPAs can advertise and solicit clients as long as such practices are:

Conducted in a professional manner

Informative about the CPA’s services

Not conducted in a misleading or deceptive manner

Paid for by outside parties

CPAs can advertise and solicit clients as long as such practices are:

Not conducted in a misleading or deceptive manner

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