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 the AICPA Code of Professional Conduct, which principle requires a CPA to be straightforward and honest in all professional and business relationships?
Answer: Integrity
The principle of integrity requires CPAs to be honest, candid, and straightforward in all professional relationships, avoiding subordination of judgment.
A CPA firm provides both audit and bookkeeping services to the same client. Which AICPA independence threat does this situation most likely create?
Answer: Self-review threat
A self-review threat arises when a CPA audits work they or their firm previously performed, making it difficult to objectively evaluate the work.
Under the AICPA Code, which rule generally prohibits a CPA in public practice from disclosing confidential client information without consent?
Answer: Rule 301 - Confidential Client Information
AICPA Rule 301 prohibits members in public practice from disclosing confidential client information obtained during professional engagements without the client's consent.
What is the AICPA's 'Independence in appearance' concept designed to protect?
Answer: Public confidence in the audit function
Independence in appearance means avoiding situations that a reasonable and informed observer would consider likely to compromise objectivity, thereby maintaining public trust.
A CPA discovers a material error in a previously issued tax return. What is the CPA's primary obligation under AICPA standards?
Answer: Inform the client and recommend correction
The CPA must promptly inform the client of the error and recommend that the client file an amended return, but cannot notify the IRS without the client's authorization.
Which body has the authority to establish ethical standards for CPAs who are members of the AICPA?
Answer: AICPA Professional Ethics Executive Committee (PEEC)
The AICPA's Professional Ethics Executive Committee (PEEC) is designated to promulgate and interpret the AICPA Code of Professional Conduct for members.