Ethics & Professional Responsibilities Flashcards
6 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Ethics & Professional Responsibilities flashcards as text
Under the Sarbanes-Oxley Act, which activity is prohibited for auditors of public companies?
Answer: Both B and C
SOX Section 201 prohibits auditors of public companies from providing financial information systems design/implementation and internal audit outsourcing to audit clients, among other non-audit services.
What is the concept of 'professional skepticism' in the context of an audit?
Answer: Maintaining a questioning mind and critically assessing evidence
Professional skepticism requires auditors to maintain a questioning attitude, remain alert for conditions indicating possible misstatement, and critically assess audit evidence.
Which action by a CPA would most likely be considered an 'act discreditable to the profession' under AICPA Rule 501?
Answer: Refusing to return a client's records after a fee dispute
Rule 501 prohibits acts discreditable to the profession, and withholding a client's records to which the client is entitled (due to a fee dispute) is specifically identified as a violation.
Under AICPA standards, when can a CPA charge a contingent fee for services?
Answer: For tax matters if there is a reasonable expectation of IRS review
CPAs may charge contingent fees in tax matters where there is a reasonable expectation that the fee arrangement will not impair independence, such as representing a client in an IRS examination.
What does the 'conceptual framework' approach in the AICPA Code require a CPA to do when facing an ethical conflict?
Answer: Identify threats to compliance, evaluate significance, and apply safeguards
The conceptual framework requires CPAs to identify and evaluate threats to fundamental principles, assess their significance, and apply safeguards to eliminate or reduce them to an acceptable level.
Under state board regulations, what is the typical continuing professional education (CPE) requirement for CPA license renewal in most US states?
Answer: 80 hours per two-year period
Most US states require CPAs to complete 80 hours of CPE in a two-year renewal period (or 40 hours annually) to maintain an active CPA license.