Regulatory Compliance & Ethics Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance & Ethics flashcards as text
The 'cooling-off period' under SOX Section 206 prevents a public company from hiring a former audit firm partner as CFO for how long after the audit engagement?
Answer: 1 year
SOX Section 206 requires a one-year cooling-off period before a former audit engagement team member can take a financial reporting oversight role at the audit client.
Which of the following best describes 'structuring' under anti-money laundering regulations?
Answer: Breaking up large cash transactions to avoid CTR reporting requirements
Structuring (also called 'smurfing') involves intentionally breaking up cash transactions below $10,000 to evade Bank Secrecy Act reporting requirements, which is itself a federal crime.
Under the AICPA's confidentiality standard, a CPA may disclose confidential client information WITHOUT client consent in which situation?
Answer: In response to a validly issued and enforceable subpoena
A CPA may disclose confidential information when legally compelled by a validly issued and enforceable subpoena or court order.
SOX Section 404 requires management and external auditors to report on the effectiveness of which of the following?
Answer: Internal control over financial reporting
SOX Section 404 requires both management's assessment and the auditor's attestation on the effectiveness of internal controls over financial reporting.
An accountant who intentionally assists a client in committing securities fraud could face which of the following consequences?
Answer: Criminal charges under 18 U.S.C. § 1348 with up to 25 years imprisonment
Intentional participation in securities fraud is a federal crime under 18 U.S.C. § 1348 (enacted by SOX), carrying penalties up to 25 years imprisonment.
Which standard-setting body issues the Generally Accepted Government Auditing Standards (GAGAS), commonly called the 'Yellow Book'?
Answer: GAO (Government Accountability Office)
The U.S. Government Accountability Office (GAO) issues GAGAS, which applies to audits of government entities and entities receiving government assistance.
A CPA firm that audits a client and also provides extensive bookkeeping services for the same client faces which primary independence issue?
Answer: Self-review threat from auditing records the firm prepared
When a firm prepares accounting records and then audits those same records, a self-review threat is created because the firm is effectively evaluating its own work.