Certified Public Accountant Ethics & Professional Responsibilities 2

Question 1

Under Circular 230, what is the minimum standard for a tax position a CPA can recommend to a client?

Accepted Answer

A realistic possibility of being sustained

Answer

Absolute certainty of success

Answer

A frivolous argument with merit

Answer

Guaranteed audit protection

Question 2

What does the AICPA's concept of 'due professional care' require of a CPA?

Accepted Answer

Exercise the skill and diligence of a reasonably competent professional

Answer

Guarantee the accuracy of all work product

Answer

Accept only engagements within their area of expertise

Answer

Consult with legal counsel on all tax matters

Question 3

A CPA firm is being peer reviewed. Which type of peer review evaluates a firm's system of quality control for all its accounting and auditing engagements?

Accepted Answer

System review

Answer

Engagement review

Answer

Compliance review

Answer

Practice inspection

Question 4

Which AICPA standard addresses a CPA's responsibility when they know a colleague has violated the Code of Professional Conduct?

Accepted Answer

There is no reporting obligation under the AICPA Code

Answer

Rule 102 requires immediate reporting to state board

Answer

Rule 501 requires filing a complaint with the AICPA

Answer

CPAs must report violations under the whistleblower rule

Question 5

What is the primary purpose of the Public Company Accounting Oversight Board (PCAOB)?

Accepted Answer

Oversee auditors of public companies to protect investors

Answer

Set GAAP standards for public companies

Answer

Regulate the SEC's enforcement actions

Answer

Issue ethics standards for all CPAs

Question 6

A CPA lacks the competence to complete a specific engagement. Under AICPA standards, what should the CPA do?

Accepted Answer

Decline the engagement or obtain necessary competence

Answer

Complete the work and disclose limitations in the report

Answer

Hire a subcontractor without telling the client

Answer

Accept the engagement and charge a lower fee