CPA CPA Ethics & Professional Responsibility 2

Question 1

A CPA who knowingly misrepresents facts to obtain a client contract has violated which AICPA principle?

Accepted Answer

Integrity

Answer

Knowingly misrepresenting facts violates the integrity principle, which demands honesty and freedom from deception in all professional dealings.

Question 2

Under the Sarbanes-Oxley Act, it is unlawful for a public company to extend credit to which individuals?

Accepted Answer

Executive officers and directors

Answer

SOX Section 402 prohibits public companies from making or arranging personal loans to their executive officers and directors.

Question 3

Which ethical framework holds that the morality of an action is determined solely by its consequences or outcomes?

Accepted Answer

Consequentialism (Utilitarianism)

Answer

Consequentialism judges actions as right or wrong based on their outcomes, with utilitarianism seeking the greatest good for the greatest number.

Question 4

When a CPA firm rotates the lead audit partner on a public company engagement, SOX requires rotation at a minimum of every:

Accepted Answer

5 years

Answer

SOX requires mandatory rotation of the lead audit partner on public company engagements at least every five years to maintain independence.

Question 5

A CPA who prepares a tax return using information provided by the client without independent verification is applying the concept of:

Accepted Answer

Reasonable reliance on client representations

Answer

CPAs may reasonably rely on client-provided information for tax returns without verification, but must not ignore obvious errors or inconsistencies.

(CPA) Certified Practicing Accountant Practice Test