Auditing and Assurance Training Professional Standards and Ethics in Auditing

Question 1

The AICPA Code of Professional Conduct requires a CPA to be independent in both fact and appearance primarily because:

Accepted Answer

It enhances the credibility and usefulness of the auditor's report to financial statement users

Answer

Independence reduces audit fees

Answer

It is required only for tax engagements

Answer

Independence eliminates all risk of audit failure

Question 2

Under PCAOB Rule 3526, audit firms must communicate to the audit committee regarding independence at:

Accepted Answer

At least annually and before accepting the engagement

Answer

Only when an independence violation is discovered

Answer

Every quarter during the audit

Answer

Only upon request by the audit committee

Question 3

The Sarbanes-Oxley Act of 2002 established the PCAOB with authority to oversee:

Accepted Answer

Auditors of public companies registered with the SEC

Answer

All CPA firms, regardless of client type

Answer

State CPA licensing boards

Answer

International auditing standard setters

Question 4

An auditor who owns even a small financial interest in an audit client has most likely violated which fundamental principle?

Accepted Answer

Independence

Answer

Confidentiality

Answer

Professional competence

Answer

Objectivity in tax services

Question 5

Which body sets auditing standards for audits of private (non-public) companies in the United States?

Accepted Answer

AICPA Auditing Standards Board (ASB)

Answer

PCAOB

Answer

SEC

Answer

FASB

Question 6

Rotating the lead engagement partner every how many years is required under PCAOB independence rules for public company audits?

Accepted Answer

5 years

Answer

3 years

Answer

7 years

Answer

10 years