Auditing and Assurance Training Professional Standards and Ethics in Auditing 2

Question 1

Under the AICPA Code, a CPA must maintain objectivity, which means:

Accepted Answer

Avoiding conflicts of interest and not allowing bias or undue influence to override professional judgment

Answer

Objectivity requires CPAs to act without personal bias, conflict of interest, or undue influence from others when performing professional services.

Question 2

Non-audit services provided by an audit firm to its SEC audit client are restricted under the Sarbanes-Oxley Act. Which of the following services is PROHIBITED?

Accepted Answer

Bookkeeping services for the audit client

Answer

SOX Section 201 prohibits audit firms from providing bookkeeping and several other non-audit services to their SEC audit clients, to prevent conflicts of interest.

Question 3

The AICPA's 'conceptual framework' approach for independence requires CPAs to evaluate threats to independence and apply:

Accepted Answer

Safeguards sufficient to eliminate or reduce threats to an acceptable level

Answer

When a specific rule doesn't address a situation, CPAs must use the conceptual framework to identify threats and determine whether available safeguards adequately mitigate them.

Question 4

Confidentiality under the AICPA Code means a CPA should NOT disclose client information without consent EXCEPT when:

Accepted Answer

Required by a court subpoena or compliance with professional standards

Answer

Confidentiality can be overridden by legal obligations such as court orders, regulatory requirements, or professional standards that mandate disclosure.

Question 5

Audit committee communication requirements under AU-C Section 260 require the auditor to discuss all of the following EXCEPT:

Accepted Answer

The detailed billing rates for each audit team member

Answer

AU-C 260 specifies a range of substantive matters to communicate to the audit committee but does not require disclosure of the firm's internal fee structure or billing rates.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Professional Standards and Ethics in Auditing 2