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
Under the SEC's independence rules, which of the following non-audit services is PROHIBITED for an auditor to provide to a public company audit client?
Answer: Bookkeeping and financial statement preparation services
The SEC prohibits auditors from providing bookkeeping and financial statement preparation services to their public company audit clients as it creates an impermissible self-review threat.
The Uniform Accountancy Act (UAA) provides a model for CPA licensing that requires which of the following as a minimum education requirement?
Answer: 150 semester hours of college education
The UAA model requires 150 semester hours of college education as a minimum for CPA licensure, though requirements vary by state.
Which of the following describes a 'material weakness' in internal controls over financial reporting under PCAOB standards?
Answer: A deficiency where there is a reasonable possibility of a material misstatement not being prevented or detected
A material weakness is a deficiency where there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected on a timely basis.
An engagement partner retires and joins the client as CFO two years later. Under SOX 'revolving door' provisions, which is true?
Answer: This violates the one-year cooling-off period required by SOX Section 206
SOX Section 206 requires a one-year cooling-off period for lead partners before accepting key financial roles at former audit clients, regardless of how the relationship ended.
Under the concept of 'professional skepticism,' an auditor is required to do which of the following?
Answer: Question evidence and maintain a critical, questioning mindset throughout the audit
Professional skepticism requires a questioning mind and critical assessment of audit evidence without assuming either honesty or dishonesty on the part of management.
Which of the following actions by a CPA would constitute a violation of the AICPA's acts discreditable rule?
Answer: Failing to file their own personal tax return
Failing to file a required tax return is an act discreditable to the profession under AICPA rules ET Section 1.400, as it reflects negatively on the profession.
Under anti-money laundering regulations, a Suspicious Activity Report (SAR) must be filed within how many days of initial detection of a suspicious transaction by a financial institution?
Answer: 30 days
FinCEN regulations require financial institutions to file a SAR within 30 days of initially detecting facts that may constitute a suspicious transaction.