CPA CFE Ethics and Professional Responsibility

Question 1

According to the CPA Canada Code of Professional Conduct, which of the following is NOT one of the five fundamental principles that all CPAs must uphold?

Accepted Answer

Profitability

Answer

Integrity

Answer

Objectivity

Answer

Confidentiality

Question 2

A CPA firm is auditing a client and discovers that the audit partner owns 200 shares in that client company. Under the CPA Code of Professional Conduct, this situation primarily creates which type of threat to independence?

Accepted Answer

Self-interest threat

Answer

Advocacy threat

Answer

Familiarity threat

Answer

Intimidation threat

Question 3

A CPA is asked by a law enforcement agency to provide a client's financial records without the client's consent. Under the principle of confidentiality, the CPA should:

Accepted Answer

Comply if legally compelled to disclose by a court order or legislation

Answer

Refuse in all circumstances to protect client confidentiality

Answer

Disclose only after obtaining approval from CPA Canada

Answer

Provide only summarized information rather than original records

Question 4

Under the CPA Code of Professional Conduct, a conflict of interest arises when a CPA's duty to one client conflicts with their duty to another client. The primary obligation of the CPA in this situation is to:

Accepted Answer

Disclose the conflict and obtain informed consent from all affected parties or withdraw

Answer

Serve the client who pays higher fees

Answer

Keep the conflict confidential to maintain client trust

Answer

Refer both clients to separate CPA firms immediately

Question 5

The principle of professional competence and due care requires a CPA to:

Accepted Answer

Maintain knowledge and skill at the level of a competent professional and act diligently

Answer

Accept all client engagements regardless of complexity

Answer

Guarantee error-free work on all engagements

Answer

Outsource complex tasks to non-CPA specialists without supervision

Question 6

A CPA sets their fees as a percentage of the amount of a tax refund obtained for a client. Under the CPA Code of Professional Conduct, this contingency fee arrangement for tax services is:

Accepted Answer

Generally prohibited as it creates a self-interest threat to objectivity

Answer

Permitted if the client provides written consent

Answer

Permitted as long as the percentage is reasonable and disclosed

Answer

Permitted only for non-public company clients

Question 7

When facing an ethical dilemma, the CPA Canada ethical decision-making framework recommends that a CPA first:

Accepted Answer

Identify the relevant facts, parties involved, and ethical issues at stake

Answer

Consult a lawyer before taking any action

Answer

Report the matter immediately to the relevant regulatory body

Answer

Withdraw from the engagement without further analysis