B. Acy Bachelor of Accountancy Ethics and Professional Responsibility 2

Question 1

Under the AICPA independence rules, a CPA is considered to lack independence if:

Accepted Answer

They own a direct financial interest in an attest client

Answer

Owning even a small direct financial interest in an attest client impairs independence under the AICPA Code.

Question 2

The concept of 'materiality' in accounting ethics means information is material if:

Accepted Answer

Its omission or misstatement could influence decisions of financial statement users

Answer

Materiality is a judgment-based threshold focused on whether information could affect the economic decisions of users.

Question 3

Which act established the Public Company Accounting Oversight Board (PCAOB)?

Accepted Answer

Sarbanes-Oxley Act of 2002

Answer

SOX created the PCAOB in 2002 to oversee audits of public companies and set auditing standards for registered firms.

Question 4

An accountant who discovers a material misstatement that management refuses to correct should:

Accepted Answer

Evaluate the effect on the audit report and consider reporting to governance or regulators

Answer

Uncorrected material misstatements require the auditor to modify the audit opinion and potentially escalate to audit committee or regulators.

Question 5

The principle of 'due professional care' under professional standards requires CPAs to:

Accepted Answer

Exercise the care and diligence of a reasonably competent professional

Answer

Due professional care requires the same level of care as a reasonably competent CPA, not perfection.

B. Acy Bachelor of Accountancy Practice Test