Certified Public Accountant Ethics & Professional Responsibilities

Question 1

Under the AICPA Code of Professional Conduct, which principle requires a CPA to be straightforward and honest in all professional and business relationships?

Accepted Answer

Integrity

Answer

The principle of integrity requires CPAs to be honest, candid, and straightforward in all professional relationships, avoiding subordination of judgment.

Question 2

A CPA firm provides both audit and bookkeeping services to the same client. Which AICPA independence threat does this situation most likely create?

Accepted Answer

Self-review threat

Answer

A self-review threat arises when a CPA audits work they or their firm previously performed, making it difficult to objectively evaluate the work.

Question 3

Under the AICPA Code, which rule generally prohibits a CPA in public practice from disclosing confidential client information without consent?

Accepted Answer

Rule 301 - Confidential Client Information

Answer

AICPA Rule 301 prohibits members in public practice from disclosing confidential client information obtained during professional engagements without the client's consent.

Question 4

What is the AICPA's 'Independence in appearance' concept designed to protect?

Accepted Answer

Public confidence in the audit function

Answer

Independence in appearance means avoiding situations that a reasonable and informed observer would consider likely to compromise objectivity, thereby maintaining public trust.

Question 5

A CPA discovers a material error in a previously issued tax return. What is the CPA's primary obligation under AICPA standards?

Accepted Answer

Inform the client and recommend correction

Answer

The CPA must promptly inform the client of the error and recommend that the client file an amended return, but cannot notify the IRS without the client's authorization.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Ethics & Professional Responsibilities