CA Regulatory Compliance & Ethics 2

Question 1

Under the AICPA Code of Professional Conduct, which threat arises when a CPA audits financial statements that they helped prepare?

Accepted Answer

Self-review threat

Answer

A self-review threat occurs when a CPA must evaluate their own prior work, impairing objectivity.

Question 2

The Sarbanes-Oxley Act Section 302 requires which of the following from public company CEOs and CFOs?

Accepted Answer

Personal certification of the accuracy of financial reports

Answer

SOX Section 302 requires CEOs and CFOs to personally certify the accuracy and completeness of financial reports filed with the SEC.

Question 3

Which of the following best describes the 'conceptual framework' approach used in professional ethics?

Accepted Answer

A principles-based approach requiring identification and evaluation of threats and safeguards

Answer

The conceptual framework requires professionals to identify threats to compliance, evaluate their significance, and apply safeguards to reduce them to an acceptable level.

Question 4

A CPA firm discovers that a client has materially misstated revenue in previously issued financial statements. What is the firm's primary obligation?

Accepted Answer

Advise the client to restate the financials and withdraw the audit report if the client refuses

Answer

The CPA must advise the client to restate the financials; if the client refuses, the auditor should withdraw the report and notify appropriate parties.

Question 5

Under PCAOB standards, how long must audit firms retain audit documentation?

Accepted Answer

7 years from the report date

Answer

PCAOB AS 1215 requires audit firms to retain audit documentation for at least 7 years from the report release date.

(CA) Chartered Certified Accountant Practice Test

(CA) Chartered Certified Accountant Practice Test

CA Regulatory Compliance & Ethics 2