CA Ethics and Governance 3

Question 1

Which of the following is considered a safeguard created by the profession to mitigate threats to a CPA's independence?

Accepted Answer

Peer review requirements and disciplinary processes

Answer

Peer review requirements, continuing education mandates, and disciplinary processes are profession-created safeguards that help protect CPA independence.

Question 2

Ethical relativism in accounting ethics holds that:

Accepted Answer

Ethical standards vary by culture and context with no universal truth

Answer

Ethical relativism posits that moral standards differ across cultures and situations, with no single universal ethical framework.

Question 3

A CPA firm partners with a financial services company to refer clients for investment products and receives compensation. This arrangement must be:

Accepted Answer

Disclosed to clients and permissible only if it doesn't impair objectivity

Answer

Referral fees and commissions must be disclosed to clients and must not impair the CPA's objectivity under the AICPA Code.

Question 4

Which of the following BEST describes the role of an audit committee in corporate governance?

Accepted Answer

Overseeing financial reporting, internal controls, and the external audit

Answer

The audit committee oversees the integrity of financial reporting, internal control effectiveness, and the relationship with external and internal auditors.

Question 5

A CPA is asked to represent a client before the IRS in a tax dispute. This is an example of which threat to objectivity?

Accepted Answer

Advocacy threat

Answer

Representing a client's position before a regulatory body creates an advocacy threat because the CPA promotes the client's interests.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Ethics and Governance 3