CGA CGA Ethics & Professional Standards 1 — Questions and Answers
Question 1: Which fundamental principle of the CPA/CGA Code of Professional Conduct requires members to be straightforward and honest in all professional and business relationships?
- Objectivity
- Integrity (Correct answer)
- Confidentiality
- Professional behavior
Correct answer: Integrity
Integrity requires CPAs to be honest and straightforward, avoiding any actions that discredit the profession.
Question 2: A CGA discovers during an audit that a client is engaged in tax fraud. Under ethical standards, the CGA should first:
- Immediately report to the IRS
- Discuss the matter with the client and consider resigning if unresolved (Correct answer)
- Ignore it if it doesn't affect the financial statements
- Disclose it in the audit report without consulting the client
Correct answer: Discuss the matter with the client and consider resigning if unresolved
Professional standards require the accountant to first communicate with client management, and if unresolved, consider resignation to avoid association with the misconduct.
Question 3: The concept of 'independence in appearance' for an auditor means:
- The auditor has no financial interest in the client
- The auditor avoids any situation that could cause a reasonable observer to doubt objectivity (Correct answer)
- The auditor is not personally acquainted with management
- The auditor works from a remote location
Correct answer: The auditor avoids any situation that could cause a reasonable observer to doubt objectivity
Independence in appearance means the auditor avoids circumstances that might lead an informed third party to question their objectivity, even if actual independence exists.
Question 4: Which of the following is NOT a threat to a CGA's independence?
- Self-interest threat
- Familiarity threat
- Advocacy threat
- Technical competence threat (Correct answer)
Correct answer: Technical competence threat
The recognized threats to independence are self-interest, self-review, advocacy, familiarity, and intimidation; technical competence is not categorized as a threat to independence.
Question 5: What does the principle of professional competence and due care require of a CGA?
- Maintaining technical knowledge and acting diligently in providing professional services (Correct answer)
- Obtaining a minimum number of clients each year
- Disclosing all client information to regulatory bodies
- Refusing engagements outside one's specialty
Correct answer: Maintaining technical knowledge and acting diligently in providing professional services
Professional competence and due care requires CGAs to maintain current knowledge, act diligently, and apply relevant standards carefully.
Question 6: Client confidentiality under professional standards generally permits disclosure without client consent when:
- A competitor requests the information
- Required by a court order or legal/professional duty (Correct answer)
- The CGA believes disclosure would benefit the client
- Another accountant asks for peer review purposes
Correct answer: Required by a court order or legal/professional duty
Confidentiality may be overridden when disclosure is required by law, court order, or a professional right or duty to disclose.
CGA CGA Ethics & Professional Standards 1
Which fundamental principle of the CPA/CGA Code of Professional Conduct requires members to be straightforward and honest in all professional and business relationships?