What is the meaning of the auditing standard that requires the auditor be independent?
1) The auditor must be without bias with respect to the client under audit.
2) The auditor must adopt a critical attitude during the audit.
3) The auditor's sole obligation is to third parties.
4) The auditor may have a direct ownership in the client's business if it is not material.
The Conceptual Framework for AICPA Independence Standards:
1) Adopts a risk-based approach to analysis of independence matters.
2) Defines independence of mind as avoiding circumstances in which reasonable persons would conclude that integrity or objectivity has been compromised.
3) Describes threats to independence as circumstances that impair independence.
4) States that safeguards must eliminate threats to independence to be considered effective
Au auditor strives to achieve independence in appearance to:
1) Comply with the auditing standards of fieldwork.
2) Become independent in fact.
3) Maintain public confidence in the profession.
4) Maintain an unbiased mental attitude.
In which of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining the audit fee?
1) A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan.
2) A fee based on the outcome of a bankruptcy proceeding.
3) A fee based on the nature of the service rendered and the CPAs expertise instead of the actual time spent on the engagement.
4) A fee based on the fee charged by the prior auditor.
The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential information obtained int he course of a professional engagement except with consent of the client. In which one of the following situations would disclosure by a CPA be in violation of the code?
1) Disclosing confidential information to another accountant interested in purchasing the CPA's practice.
2) Disclosing confidential information in compliance with a subpoena issued by a court.
3) Disclosing confidential information in order to properly discharge the CPA's responsibilities in accordance with the profession's standards.
4) Disclosing confidential information during an AICPA authorized peer review.
A CPA's retention of client records as a means of enforcing payment of an overdue audit fee is an action that is :
1) Not addressed by the AICPA Code of Professional Conduct .
2) Acceptable if sanctioned by state laws.
3) Prohibited under the AICPA rules of conduct.
4) A violation of GAAS.
4 parts of the AICPA code of pro. conduct
2. Rules of conduct
3. interpretations of the rules
4. ethical ruling
Explain the "Principles" portion of the code of pro. conduct
Principles provide the "ideal" standards. Represent the maximum standard
Explain "rules of conduct"
the "minimum" standard expected. Provides more specific rules
what enforcement actions may occur if an auditor fails to follow the rules of conduct?
1. expulsion from the AICPA
2. investigation by the AICPA
3. requirement to remediate the problem
4. revoke cpa license
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