Professional Standards & Competencies Flashcards
7 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 7 Professional Standards & Competencies flashcards as text
The AICPA's 'Integrity' principle requires CPAs to be:
Answer: Honest and candid, even when it disadvantages the CPA or client
Integrity requires honest and candid communication within the constraints of confidentiality, even when the truth is inconvenient.
Which of the following best describes the 'attestation risk' in an attestation engagement?
Answer: The risk that the practitioner expresses an inappropriate conclusion
Attestation risk is the risk that the practitioner expresses an inappropriate opinion or conclusion on subject matter that is materially misstated.
A CPA must retain audit documentation for a minimum of how many years under AICPA standards for a nonpublic company audit?
Answer: 7 years
AU-C Section 230 requires retention of audit documentation for at least five years from the report release date — though seven years is common in practice and required by PCAOB for public companies.
Under the AICPA Code, a CPA is permitted to disclose confidential client information without client consent in which scenario?
Answer: In response to a valid subpoena or court order
ET Section 1.700 permits disclosure without client consent when required by a valid legal process such as a court order or subpoena.
The 'competence' general standard requires that a CPA undertake only engagements that the firm can complete with:
Answer: Professional competence through training, education, or consultation
A CPA may accept an engagement in a new area if they can attain competence through education, training, or consultation with qualified specialists.
An emphasis-of-matter paragraph in an audit report is used to:
Answer: Draw users' attention to a matter disclosed in the financial statements
An emphasis-of-matter paragraph (AU-C Section 706) highlights a matter already properly disclosed in the financials without modifying the audit opinion.
Under the PCAOB's AS 2605, a principal auditor who uses the work of another auditor must:
Answer: Decide whether to refer to the other auditor or assume full responsibility
AS 2605 gives the principal auditor the choice to assume responsibility for the other auditor's work (no reference) or divide responsibility (with reference in the report).