CPA Ethics & Professional Responsibility Flashcards

A CPA is asked by a new employer to falsify records. The CPA should:

Answer: Refuse and consider reporting the request

A CPA must refuse to falsify records regardless of who makes the request, as this would violate the integrity principle and potentially constitute fraud.

Which of the following best describes 'objectivity' as an ethical requirement for CPAs?

Answer: Remaining free from conflicts of interest and bias in professional judgments

Objectivity requires CPAs to be impartial, intellectually honest, and free from conflicts of interest when forming and expressing professional opinions.

Under the AICPA Code, a contingent fee arrangement is generally prohibited when a CPA performs which type of service for the same client?

Answer: Attest engagements

Contingent fees are prohibited for attest engagements because they create a financial interest in the outcome, impairing independence.

The AICPA's 'Responsibilities' principle states that CPAs should exercise sensitive professional and moral judgments in all their activities primarily to serve:

Answer: The public interest

The Responsibilities principle recognizes that CPAs have obligations to the public, clients, and colleagues, with public interest as the paramount concern.

Which action could result in a CPA being charged with 'acts discreditable to the profession' under AICPA Rule 501?

Answer: Failing to file one's own tax return

Failing to file a required tax return is specifically cited as an act discreditable to the profession under AICPA ethics rules.

A CPA firm is considered to have a covered member relationship with a client when the member:

Answer: Is assigned to or can influence the attest engagement

A covered member is a person assigned to an attest engagement or who can influence it, and independence standards apply most strictly to these individuals.