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CPA Ethics Exam questions with solutions
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Exam of 64 pages for the course CPA at CPA (CPA Ethics Exam)
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CPA Ethics ExamWhich category contains the ethical standards, a
violation of which makes a member liable to disciplinary
action?
(a) Ethics Rulings.
(b) Interpretations of the Rules.
(c) Rules. - answer(c) is the conect answer. Code of Professional
Conduct, Strncture, says that infraction of any of the rules makes a member liable to
disciplinary action.
(a) is wrong since members who depart from the
guidance in ethical rulings in similar circumstances
will be asked to justify such departure. They cannot
however be charged with violating a ruling.
(b) is also wrong since a member cannot be
charged with violating an interpretation. In a disciplina1y
hearing where the member was charged with
violating a rnle, the member would have the burden of justifying any departure from
interpretations ofthat rule.
The Trial Board may, after a hearing, do two of the
three things listed below. Mark the one that the Trial
Board cannot do.
(a) Suspend a member.
(b) Suspend the member's CPA certificate.
( c) Expel a member. - answer(b) is the correct answer. Code of Professional
Conduct, Enforcement, says a Trial Board may
admonish, suspend or expel a member. The Trial
Board has no jurisdiction over a member's CPA
certificate.
Which of the following requires that any changes in
them be approved by the members of the AICPA?
(a) Rules and interpretations of the rules.
(b) Principles and rules.
(c) Principles, rules and interpretations of the rules. - answer(b) is correct. Code of
Professional Conduct,
,Structure, says that Principles and Rules must be
approved by the AI CPA members.
(a) is wrong and ...
( c) is wrong since interpretations are prepared and issued by the Professional Ethics
Executive Committee without obtaining approval by the members.
The results of a guilty finding by a Trial Board will
be:
(a) published by the AICPA, but the member 's name will not be disclosed.
(b) published by the AICPA. and the member 's name will be disclosed if the Trial Board
votes to do
so.
(c) published by the AICPA with the member 's
name given. - answer(c) is correct. Code of Professional Conduct,
Enforcement says that Trial Board convictions must
be published with the member's name disclosed.
(a) is then wrong since the name must be disclosed.
(b) is also wrong since the Trial Board does not have the option of deciding whether or
not the member's name will be disclosed.
An interpretation or ethics ruling usually becomes
effective:
(a) the first day of the month following the
month it is published in the Journal of Accountancy.
(b) two weeks after it is published in The CPA
Letter.
(c) the last day of the month in which it is
published in the Journal of Accountancy. - answer(c) is corect. Code of Professional
Conduct,
Structure, says that interpretations and rulings are
normally effective the last day of the month they are published in the Journal of
Accountancy.
(a) and (b) are therefore wrong.
A CPA in public practice ______________ avoid operating
under a code of professional ethics by choosing not
to join either the AICPA or any state CPA society.
(a) may
(b) may not - answer(b) is correct. Code of Professional Conduct, Coverage, says that
no CPA practicing public accounting may avoid operating under a code of ethics. The
CPA may not join the AI CPA or his or her state CPA society and therefore would not be
subject to their codes of ethics. The CPA, however, cannot avoid being subject to his or
her state board of accountancy's code of ethics
The accounting profession 's public includes
(a) Governmental agencies.
,(b) Credit grantors.
(c) Investors.
(d) All of the above - answer(d) is the correct answer. As (see Article II) the
CPA's public includes everyone that relies on them. This then would include
(a) governmental agencies,
(b) credit grantors and
(c) investors.
Compliance with the AICPA Code of Professional
Conduct depends primarily on:
(a) Public opinion and reinforcement of one's attestation peers.
(b) Disciplinary proceedings when the code is
violated.
(c) Member's understanding the code and voluntary compliance with it. - answer(c) is
the correct answer. Composition, Applicability
and Compliance in the Articles says that compliance with the code, as with all standards
in an open society, depends primarily on member 's understanding of the code and
voluntary compliance with it.
(a) is wrong. This section says that reinforcement by one's peers and public opinion is
secondary
in obtaining compliance with the code.
(b) is also wrong since this section says disciplinary proceedings against those that
violate the code are the ultimate or final method of obtaining compliance.
The Principles state that a member has responsibility
to:
(a) Colleagues.
(b) Clients.
(c) The public.
(d) All of the above. - answer(d) is correct. The Preamble to the Articles says that
members have
(a) a responsibility to colleagues,
(b) to clients and
(c) to the public.
The Principles in the AICPA Code of Professional
Conduct ___________________ enforceable under their own terms.
(a) are.
(b) are not. - answer(b) is correct. Principles are not enforceable under
their own terms as shown in the section Purpose. Principles are goal-oriented and the
rules of
ethics are made and adopted within that framework.
A distinguishing mark of a profession is:
(a) Acceptance of its responsibility to the public.
(b) The esteem with which it is held by the public.
, (c) Its ability to influence legislation. - answer(a) is correct. As stated in Article II, the
distinguishing mark of a profession is acceptance of its responsibility to the public.
(b) The esteem by which it is held by the public
will come when it shows its responsibility to the public.
(c) Influencing legislation may be important to the profession but it is not the
distinguishing
mark of a profession.
The AICPA Code of Professional Conduct provides
guidance and rules for:
(a) Only members in public practice.
(b) All members.
(c) Only members engaged in rendering attestation
services. - answer(b) is correct. The Code of Professional Conduct
provides rules for all members, As stated in the Articles, section Composition, the
membership
adopted the code to provide guidance and rules for all members-those in public
practice, in
industry, in government and in education.
Due care requires a member to:
(a) Perform work for clients at the lowest cost.
(b) Perform work for the clients with competence
and diligence.
(c) Complete each year a specified number of
hours of Continuing Professional Education
courses. - answer(b) is correct. Article V requires a member to per-form his professional
work with competence and diligence.
(a) The Principles do not address the subject of fees or
(c) Continuing Professional Education.
Jones & Barnes, a public accounting firm, has offices
in Minneapolis, Chicago and 10 other cities. The firm 's
executive office and the managing partner are in Chicago.
Each office does all the work and issues the audit reports
for the clients of that office. Black & Co. is an audit client
of the Minneapolis office.
State whether in the following situations the individual
would be a "covered member" with respect to the 2001
calendar year audit of Black & Co.
Gilbert , a tax partner in the Chicago office
(a) is a covered member.
(b) is not a covered member. - answer(b) is correct. (Covered member (d)) includes
partners in the office where the attest engagement
partner is located. Since Minneapolis does all the
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