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

The five fundamental principles are Integrity, Objectivity, Professional Competence and Due Care, Confidentiality, and Professional Behaviour — profitability is not among them.

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

A financial interest in an audit client creates a self-interest threat because the auditor may be influenced by a desire to protect or enhance that personal financial position.

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

Confidentiality does not prevent disclosure when required by law or a court order — legal compulsion is a recognized exception to the duty of confidentiality.

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

The CPA must disclose the conflict to all affected parties and obtain their informed consent, or withdraw from acting for one or both parties if consent cannot be obtained.

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

Professional competence and due care require maintaining relevant knowledge and skill and applying that competence diligently, carefully, and in accordance with applicable standards.

CPA CFE Practice Test

CPA CFE Practice Test

CPA CFE Ethics and Professional Responsibility