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

Reporting entities must report suspicious transactions and cash transactions of $10,000 or more to FINTRAC, Canada's financial intelligence unit.

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

Firm-level safeguards include quality control policies and procedures, such as independent partner reviews of independence and ethics compliance.

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

Objectivity means that a CPA's professional judgment must be free from bias, conflict of interest, or undue influence that could override their professional or business judgments.

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

Integrity requires that CPAs be straightforward and honest in all professional and business relationships, avoiding misleading statements or omissions.

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

Under NOCLAR guidance, when internal escalation fails, the CPA should consider whether to report the non-compliance to an appropriate external authority to protect the public interest.

CPA CFE Practice Test

CPA CFE Practice Test

CPA CFE Ethics and Professional Responsibility 2