Compliance and Auditing Ethics and Professional Standards

Question 1

Which organization publishes the Code of Professional Conduct governing the ethical behavior of Certified Public Accountants (CPAs) in the United States?

Accepted Answer

AICPA

Answer

SEC

Answer

PCAOB

Answer

IIA

Question 2

The confidentiality principle in professional ethics requires auditors to:

Accepted Answer

Not disclose information acquired during professional services to third parties without proper authority

Answer

Share client information freely with any regulatory body that requests it

Answer

Disclose all material client information to the investing public

Answer

Keep only financial data confidential while sharing operational data freely

Question 3

Which ethical principle requires auditors to perform duties with competence, diligence, and care?

Accepted Answer

Professional competence and due care

Answer

Integrity

Answer

Objectivity

Answer

Independence

Question 4

When an auditor holds a direct financial interest in a client's company, this creates a threat to which core principle?

Accepted Answer

Independence

Answer

Confidentiality

Answer

Integrity

Answer

Professional behavior

Question 5

The IIA's International Standards for the Professional Practice of Internal Auditing require internal auditors to maintain which combination of attributes?

Accepted Answer

Independence and objectivity in their work

Answer

External audit certifications and continuing education

Answer

Independence from the external auditors only

Answer

Financial independence from the organization they audit

Question 6

What does 'independence in appearance' mean in the context of auditing?

Accepted Answer

The perception by reasonable third parties that the auditor is independent

Answer

The auditor's actual mental state of objectivity and impartiality

Answer

The auditor's physical separation from the client's office

Answer

The legal requirement documented in auditor engagement letters

Question 7

Which of the following is an example of a 'self-review threat' to auditor independence?

Accepted Answer

An auditor reviewing financial statements they previously prepared

Answer

An auditor accepting gifts from client management

Answer

An auditor having a personal friendship with the client's CFO

Answer

An auditor advocating for a client's position in a regulatory dispute