Ethics & Professional Responsibilities Flashcards
6 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Ethics & Professional Responsibilities flashcards as text
Under Circular 230, what is the minimum standard for a tax position a CPA can recommend to a client?
Answer: A realistic possibility of being sustained
Circular 230 requires that a tax practitioner have a reasonable basis for a position and, for signing a return, that the position have at least a realistic possibility (approximately 1-in-3 chance) of success.
What does the AICPA's concept of 'due professional care' require of a CPA?
Answer: Exercise the skill and diligence of a reasonably competent professional
Due professional care requires CPAs to act diligently and competently, applying the skill level of a reasonably competent CPA — not guaranteeing perfect results.
A CPA firm is being peer reviewed. Which type of peer review evaluates a firm's system of quality control for all its accounting and auditing engagements?
Answer: System review
A system review assesses a firm's system of quality control for its accounting and auditing practice, whereas an engagement review only examines selected work products.
Which AICPA standard addresses a CPA's responsibility when they know a colleague has violated the Code of Professional Conduct?
Answer: There is no reporting obligation under the AICPA Code
The AICPA Code of Professional Conduct does not impose an affirmative duty on CPAs to report another member's violations, though members may choose to report them.
What is the primary purpose of the Public Company Accounting Oversight Board (PCAOB)?
Answer: Oversee auditors of public companies to protect investors
The PCAOB was established by SOX to oversee the audits of public companies and broker-dealers in order to protect investors and the public interest.
A CPA lacks the competence to complete a specific engagement. Under AICPA standards, what should the CPA do?
Answer: Decline the engagement or obtain necessary competence
A CPA should not accept engagements they cannot competently perform; they must either acquire the necessary knowledge/skills or refer the client to a competent practitioner.