CGA CGA Ethics & Professional Standards 2

Question 1

Which of the following scenarios represents a self-review threat to auditor independence?

Accepted Answer

The auditor's firm prepared the financial statements it is now auditing

Answer

The auditor owns shares in the audit client

Answer

The auditor has a close friendship with the CFO

Answer

The auditor advocates for the client in a tax dispute

Question 2

The 'threats and safeguards' approach in the CPA Code of Ethics requires a member to:

Accepted Answer

Identify threats to compliance, evaluate their significance, and apply safeguards

Answer

Avoid any situation that could involve a conflict of interest

Answer

Report all potential threats to the professional body immediately

Answer

Decline all non-audit services to audit clients

Question 3

An accountant faces an ethical conflict when:

Accepted Answer

Employer pressure conflicts with compliance with professional standards

Answer

Two accounting standards apply to the same transaction

Answer

Two clients need work done simultaneously

Answer

A tax deduction is unclear under the regulations

Question 4

Which body is primarily responsible for setting ethical standards for CPAs/CGAs in the United States?

Accepted Answer

AICPA

Answer

FASB

Answer

IRS

Answer

SEC

Question 5

A CGA who advertises services in a false or misleading manner violates which fundamental principle?

Accepted Answer

Professional behavior

Answer

Confidentiality

Answer

Objectivity

Answer

Professional competence

Question 6

What is the primary purpose of continuing professional education (CPE) requirements for CGAs?

Accepted Answer

To ensure members maintain competence throughout their careers

Answer

To generate revenue for the professional body

Answer

To allow members to expand into new service areas

Answer

To satisfy IRS licensing requirements