FAC FAC Ethics, Compliance & Professional Standards

Question 1

Which organization establishes and maintains the Code of Professional Conduct governing U.S. Certified Public Accountants (CPAs)?

Accepted Answer

AICPA

Answer

IRS

Answer

SEC

Answer

FASB

Question 2

What does auditor independence fundamentally require?

Accepted Answer

Freedom from bias or conflicts of interest affecting professional judgment

Answer

Working alone without a team

Answer

Refusing all direct communication with management

Answer

Limiting audit procedures to low-risk areas

Question 3

Under the Sarbanes-Oxley Act (SOX), which section requires management to assess and report on the effectiveness of internal controls over financial reporting?

Accepted Answer

Section 404

Answer

Section 302

Answer

Section 806

Answer

Section 101

Question 4

Which ethical principle requires a CPA to be straightforward and honest in all professional and business relationships?

Accepted Answer

Integrity

Answer

Objectivity

Answer

Confidentiality

Answer

Professional competence

Question 5

If a CPA discovers that a client has a material misstatement in previously issued financial statements, what is the appropriate action?

Accepted Answer

Advise the client to correct the misstatement and consider informing appropriate parties

Answer

Ignore it if it was immaterial at the time of original issuance

Answer

Resign immediately without explanation

Answer

Issue an unmodified opinion on the current year and move on

Question 6

The IMA Statement of Ethical Professional Practice identifies four overarching standards. Which standard prohibits disclosing confidential information except when legally obligated to do so?

Accepted Answer

Confidentiality

Answer

Competence

Answer

Integrity

Answer

Credibility