CAT CAT Business Ethics & Professional Standards 1 — Questions and Answers
Question 1: Which professional body sets the ethical standards that a Certified Accounting Technician in the US is primarily expected to follow?
- AICPA (Correct answer)
- SEC
- IRS
- FASB
Correct answer: AICPA
The AICPA establishes the Code of Professional Conduct that guides accounting professionals, including technicians, in the US.
Question 2: A CAT discovers their employer has been overstating revenue. What is the most appropriate first step?
- Report internally to management or an ethics hotline (Correct answer)
- Immediately notify the IRS
- Resign without taking any action
- Correct the records without informing anyone
Correct answer: Report internally to management or an ethics hotline
Professional standards require reporting suspected fraud through internal channels first before escalating externally.
Question 3: What does the concept of 'independence' require from an accounting professional?
- Avoiding financial or personal relationships that could bias judgment (Correct answer)
- Working without supervision at all times
- Preparing financial statements without client input
- Refusing all forms of compensation
Correct answer: Avoiding financial or personal relationships that could bias judgment
Independence requires that an accountant has no financial or personal interest that could compromise objectivity.
Question 4: Which ethical principle obligates an accounting technician to keep client information private?
- Confidentiality (Correct answer)
- Integrity
- Objectivity
- Due care
Correct answer: Confidentiality
The confidentiality principle prohibits disclosing client information to third parties without proper authorization.
Question 5: If a client asks a CAT to record a personal expense as a business expense, the technician should:
- Refuse and explain the ethical and legal implications (Correct answer)
- Record it since the client is paying for the service
- Record it only if the amount is immaterial
- Ask a supervisor to handle the request
Correct answer: Refuse and explain the ethical and legal implications
Recording personal expenses as business expenses is fraudulent, and a CAT must refuse to participate in any misrepresentation.
Question 6: What is 'due professional care' in the context of accounting ethics?
- Applying competence and diligence expected of a skilled professional (Correct answer)
- Avoiding all client contact to prevent bias
- Filing every document with government agencies
- Obtaining a second opinion on all financial decisions
Correct answer: Applying competence and diligence expected of a skilled professional
Due professional care means performing work with the competence, thoroughness, and diligence of a reasonably skilled practitioner.
CAT CAT Business Ethics & Professional Standards 1
Which professional body sets the ethical standards that a Certified Accounting Technician in the US is primarily expected to follow?