AICPA ETHICS CODE EXAM/ AICPA
ETHICS/CODE OF PROFESSIONAL CONDUCT
NEWEST EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS GRADED A+
NEW MODIFIED
Which activity would be least likely to create unacceptable
threats to a member's independence?
A. Consummate a translation on behalf of the client with
potential investors
B. Prepare financial statements based on the client's trial
balance
C. Prepare source documents for the client - ✔✔✔ correct answer > B.
Prepare financial statements based on the client's trial balance
A member may prepare financial statements from a client's trial
balance without impairing independence. It's simply taking
financial statement data the client prepared and approved and
,organizing it into the four statements. The other two options
were mentioned on previous slides as activities a member
should not do, since those would impair the CPA's
independence. So B would be the least likely to impair
independence.
Mermaid Co. engages Olsen CPAs to help improve the operating
effectiveness of certain internal controls. Olsen also audits
Mermaid's financial statements. Which of these creates an
unacceptable management participation threat to Olsen's
independence?
A. Provide research materials to Mermaid's management
B. Make recommendations to Mermaid
C. Set policy for Mermaid - ✔✔✔ correct answer > C. Set policy for
Mermaid
Setting policy is considered a management responsibility that
the CPA must not perform for an attest client.
,Deen's CPA accepts a commission from Lara Corp, a financial
statement review client, for referring Lara to an insurer. Which
statement is accurate regarding commissions?
A. The commission is prohibited because a review client paid
the fee for Deen's referral of business to a third party
B. The commission is prohibited if the fee structure is
material to Deen and will be paid to Deen over a period of time
C. The commission is permitted if Deen discloses to Lara that
I will e receiving the fee
D. The commission is permitted because Deen does not
perform an audit of Lara's financial statements - ✔✔✔ correct answer >
A. The commission is prohibited because a review client paid
the fee for Deen's referral of business to a third party
Since Lara is a review client, Deen is prohibited from receiving
a commission for either (a) recommending to Lara services or
products that a third party will provide, or (b) recommending
Lara's services or products to others. See slide 34 and 36.
Which statement about the application of SEC independence
rules to the audit of an SEC registrant is true?
, A. If a circumstance is not specifically addressed in the rules,
you must assume that independence is impaired
B. The four basic principles should be considered, in addition
to the specific rules
C. The rules do not apply to auditors of nonpublic broker-
dealers or investment advisers
D. If try AICPA and state board rules apply, the SEC rules
would not also apply - ✔✔✔ correct answer > B. The four basic
principles should be considered, in addition to the specific rules
You should always consider the four basic principles, in addition
to the specific rules
Which phrase is used by the Code of Professional Conduct to
describe integrity?
A. Forceful advocate of the client's position
B. Valued. business adviser to the client
C. Willing to do what it takes to achieve a proper outcome
ETHICS/CODE OF PROFESSIONAL CONDUCT
NEWEST EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS GRADED A+
NEW MODIFIED
Which activity would be least likely to create unacceptable
threats to a member's independence?
A. Consummate a translation on behalf of the client with
potential investors
B. Prepare financial statements based on the client's trial
balance
C. Prepare source documents for the client - ✔✔✔ correct answer > B.
Prepare financial statements based on the client's trial balance
A member may prepare financial statements from a client's trial
balance without impairing independence. It's simply taking
financial statement data the client prepared and approved and
,organizing it into the four statements. The other two options
were mentioned on previous slides as activities a member
should not do, since those would impair the CPA's
independence. So B would be the least likely to impair
independence.
Mermaid Co. engages Olsen CPAs to help improve the operating
effectiveness of certain internal controls. Olsen also audits
Mermaid's financial statements. Which of these creates an
unacceptable management participation threat to Olsen's
independence?
A. Provide research materials to Mermaid's management
B. Make recommendations to Mermaid
C. Set policy for Mermaid - ✔✔✔ correct answer > C. Set policy for
Mermaid
Setting policy is considered a management responsibility that
the CPA must not perform for an attest client.
,Deen's CPA accepts a commission from Lara Corp, a financial
statement review client, for referring Lara to an insurer. Which
statement is accurate regarding commissions?
A. The commission is prohibited because a review client paid
the fee for Deen's referral of business to a third party
B. The commission is prohibited if the fee structure is
material to Deen and will be paid to Deen over a period of time
C. The commission is permitted if Deen discloses to Lara that
I will e receiving the fee
D. The commission is permitted because Deen does not
perform an audit of Lara's financial statements - ✔✔✔ correct answer >
A. The commission is prohibited because a review client paid
the fee for Deen's referral of business to a third party
Since Lara is a review client, Deen is prohibited from receiving
a commission for either (a) recommending to Lara services or
products that a third party will provide, or (b) recommending
Lara's services or products to others. See slide 34 and 36.
Which statement about the application of SEC independence
rules to the audit of an SEC registrant is true?
, A. If a circumstance is not specifically addressed in the rules,
you must assume that independence is impaired
B. The four basic principles should be considered, in addition
to the specific rules
C. The rules do not apply to auditors of nonpublic broker-
dealers or investment advisers
D. If try AICPA and state board rules apply, the SEC rules
would not also apply - ✔✔✔ correct answer > B. The four basic
principles should be considered, in addition to the specific rules
You should always consider the four basic principles, in addition
to the specific rules
Which phrase is used by the Code of Professional Conduct to
describe integrity?
A. Forceful advocate of the client's position
B. Valued. business adviser to the client
C. Willing to do what it takes to achieve a proper outcome
