CPA CFE Ethics and Professional Responsibility 2

Question 1

Under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act, CPAs in certain roles are considered 'reporting entities.' Which of the following obligations does this impose on them?

Accepted Answer

Report suspicious transactions and large cash transactions to FINTRAC

Answer

Report all client tax information to FINTRAC annually

Answer

Obtain anti-money laundering approval before accepting any client

Answer

Disclose all client financial data to the Canada Revenue Agency

Question 2

A CPA identifies a threat to their independence but concludes that safeguards can reduce it to an acceptable level. Which of the following is an example of a firm-level safeguard?

Accepted Answer

Quality control policies requiring partner review of independence assessments

Answer

The client agrees to the engagement without conditions

Answer

The CPA personally decides the threat is immaterial

Answer

Reducing the engagement fee to demonstrate goodwill

Question 3

The principle of objectivity requires that a CPA's professional judgment must not be compromised by:

Accepted Answer

Bias, conflict of interest, or undue influence of others

Answer

Client requests for timely delivery of work

Answer

Complexity of the applicable accounting standards

Answer

The need to meet regulatory filing deadlines

Question 4

The principle of integrity under the CPA Code of Professional Conduct primarily means that a CPA must be:

Accepted Answer

Straightforward and honest in all professional and business relationships

Answer

Technically proficient in all areas of accounting

Answer

Efficient in completing client work within budget

Answer

Compliant with all provincial tax regulations

Question 5

A CPA discovers that their employer is engaged in material financial fraud. The CPA has raised the concern internally and been ignored. Under the CPA Code's guidance on responding to non-compliance with laws and regulations (NOCLAR), the CPA should:

Accepted Answer

Consider escalating the matter or, if necessary, reporting to an appropriate external authority

Answer

Continue working and document all concerns in a personal file

Answer

Immediately resign and take no further action to preserve confidentiality

Answer

File an anonymous complaint with the CRA without disclosing their identity

Question 6

A CPA in public practice holds client funds in trust. The most fundamental rule governing trust accounts under the CPA Code of Professional Conduct is:

Accepted Answer

Client funds must be kept separate from the firm's own funds at all times

Answer

Trust funds may be commingled with the firm's operating funds if kept in separate ledgers

Answer

Trust funds can be used temporarily if replenished before month-end

Answer

The CPA must invest trust funds in interest-bearing accounts for the client's benefit

Question 7

Under the CPA Code of Professional Conduct, restrictions on advertising by CPAs are primarily designed to ensure that advertising:

Accepted Answer

Is not false or misleading and does not bring the profession into disrepute

Answer

Is limited to print media only

Answer

Is pre-approved by the provincial CPA body before publication

Answer

Discloses the CPA's fee schedule to prospective clients