AICPA Ethics Code Exam | most Recent Exam 2026-2027
Actual Complete Real Exam Questions and Correct
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A new staff accountant obtains an automobile loan under
normal term and conditions from an audit client to purchase a
BW sports car. The car is material to his net worth; it is his net
worth as is the amount borrowed. He is a covered member of
the lender. Did this loan impair independence? A. No, because
it is fully secured (collateralized) by the automobile
B. No, if it was used to purchase a foreign car
C. Yes, because it is material to the staff's net worth
D. Yes, if the sticker price exceeds $40,000 - ANSWER -A. No,
because it is fully secured (collateralized) by the automobile
An auto loan does not impair independence if it is obtained
under the lender's normal terms and conditions and is fully
secured by the vehicle. Car loans that are fully secured
(collateralized) is a permitted loan that is an exception to the
independence rules (See slide 13).
A manager obtained her MBA prior to joining the firm 2013.
While going to school, she obtained student loans under the
lenders normal terms and conditions that are not material to
her net worth. She is a covered member of the lender that made
the loan. Does this loan impair independence?
A. No, because the money way used to obtain a student loan
,B. No, because the loan is not material to the managers net
worth and was obtained prior to her joining the firm
C. Yes, if the manager obtained it within 5 years of joining the
firm
D. Yes, because the manager is a covered member - ANSWER -
B. No, because the loan is not material to the manager's net
worth and was obtained prior to her joining the firm
A grandfathered and or covered member loan does not impair
independence if the loan is immaterial to her net worth and she
meets the other requirements for grandfathering. Certain
grandfathered loans are an exception to the independence
rules (see slide 14).
A tax partner obtained a personal loan from a business
associate in 2010. In 2014, the business associate became a
director of the partner's client which is also an audit client of
the firm. Does this loan impair independence?
A. Probably, because she is aware of the situation, the partner
should evaluate the loan under the conceptual framework
B. Yes, the partner should renegotiate the loan as soon as
possible
C. No, because the lender is a colleague, not an attest client
D. No, because the partner acquired the loan before the lender
became a director of an audit client - ANSWER -A. Probably,
because she is aware of the situation, the partner should
evaluate the loan under the conceptual framework When
aware, a covered member should evaluate possible threats to
independence caused by a lending relationship with an
, officer, director, or 10% or greater shareholder of an audit
client's affiliate.
A staff member has a credit card from an attest client with
respect to which he is a covered member. The balance on his
current credit card statement is $10,100 and is material to his
net worth. Does this impair independence? A. No, because
credit card loans do not create threats to independence
B. No, because the staff member rarely uses the credit card
C. Yes, because the month purchases are material to the staff
person's net worth
D. Yes, if the staff person does not. maintain a current balance
of $10,000 or less - ANSWER -D. Yes, if the staff person does
not maintain a current balance of $10,000 or less
If the stand maintains a balance of $10,000 or less on a current
basis, taking in to consideration the payment due date and any
available grace period, the loan
does not impair independence. See slide 13 - since the amount
is over $10,000
independence would be
impaired
When performing non attest services for clients, which of these
is the CPAs (AICPA member's) responsibility?
A. Evaluate the adequacy of the services performed
B. Establish an understanding with the client as to the services
to be performed C. Design and implement the company's
internal controls
Actual Complete Real Exam Questions and Correct
Answers (Verified Answers) Already Graded A+ |
Guaranteed Success!!| Newest Exam | Just
Released!!
A new staff accountant obtains an automobile loan under
normal term and conditions from an audit client to purchase a
BW sports car. The car is material to his net worth; it is his net
worth as is the amount borrowed. He is a covered member of
the lender. Did this loan impair independence? A. No, because
it is fully secured (collateralized) by the automobile
B. No, if it was used to purchase a foreign car
C. Yes, because it is material to the staff's net worth
D. Yes, if the sticker price exceeds $40,000 - ANSWER -A. No,
because it is fully secured (collateralized) by the automobile
An auto loan does not impair independence if it is obtained
under the lender's normal terms and conditions and is fully
secured by the vehicle. Car loans that are fully secured
(collateralized) is a permitted loan that is an exception to the
independence rules (See slide 13).
A manager obtained her MBA prior to joining the firm 2013.
While going to school, she obtained student loans under the
lenders normal terms and conditions that are not material to
her net worth. She is a covered member of the lender that made
the loan. Does this loan impair independence?
A. No, because the money way used to obtain a student loan
,B. No, because the loan is not material to the managers net
worth and was obtained prior to her joining the firm
C. Yes, if the manager obtained it within 5 years of joining the
firm
D. Yes, because the manager is a covered member - ANSWER -
B. No, because the loan is not material to the manager's net
worth and was obtained prior to her joining the firm
A grandfathered and or covered member loan does not impair
independence if the loan is immaterial to her net worth and she
meets the other requirements for grandfathering. Certain
grandfathered loans are an exception to the independence
rules (see slide 14).
A tax partner obtained a personal loan from a business
associate in 2010. In 2014, the business associate became a
director of the partner's client which is also an audit client of
the firm. Does this loan impair independence?
A. Probably, because she is aware of the situation, the partner
should evaluate the loan under the conceptual framework
B. Yes, the partner should renegotiate the loan as soon as
possible
C. No, because the lender is a colleague, not an attest client
D. No, because the partner acquired the loan before the lender
became a director of an audit client - ANSWER -A. Probably,
because she is aware of the situation, the partner should
evaluate the loan under the conceptual framework When
aware, a covered member should evaluate possible threats to
independence caused by a lending relationship with an
, officer, director, or 10% or greater shareholder of an audit
client's affiliate.
A staff member has a credit card from an attest client with
respect to which he is a covered member. The balance on his
current credit card statement is $10,100 and is material to his
net worth. Does this impair independence? A. No, because
credit card loans do not create threats to independence
B. No, because the staff member rarely uses the credit card
C. Yes, because the month purchases are material to the staff
person's net worth
D. Yes, if the staff person does not. maintain a current balance
of $10,000 or less - ANSWER -D. Yes, if the staff person does
not maintain a current balance of $10,000 or less
If the stand maintains a balance of $10,000 or less on a current
basis, taking in to consideration the payment due date and any
available grace period, the loan
does not impair independence. See slide 13 - since the amount
is over $10,000
independence would be
impaired
When performing non attest services for clients, which of these
is the CPAs (AICPA member's) responsibility?
A. Evaluate the adequacy of the services performed
B. Establish an understanding with the client as to the services
to be performed C. Design and implement the company's
internal controls
