CPA ETHICS EXAM Actual Exam
2026/2027 | Official Exam – Complete Q&A
with Rationales – Pass Guaranteed - A+
Graded
Total Questions: 200 | Time: 240 min | Pass: 75%
TABLE OF CONTENTS
Section 1 | AICPA Code of Professional Conduct | Q1 – Q50
Section 2 | Independence, Integrity, and Objectivity | Q51 – Q100
Section 3 | Ethical Standards for Tax Practice (Circular 230) | Q101 – Q150
Section 4 | Professional Responsibilities and Disciplinary Actions | Q151 – Q200
Instructions: Choose the single best answer. Pass: 75% in 240 minutes.
══════════════════════════════════════
SECTION 1: AICPA CODE OF PROFESSIONAL CONDUCT Q1 – Q50
══════════════════════════════════════
Question 1 of 200
Maya Chen, a 34-year-old CPA in private practice, is approached by a prospective client
who owns a chain of restaurants. The client asks Maya to prepare financial statements
that understate liabilities by 15% so the business can qualify for a favorable lease. Maya
explains that such a misstatement would violate professional standards, but the client
insists it is a one-time request and offers to pay triple her normal fee. Under the AICPA
Code of Professional Conduct, what is Maya's most appropriate course of action?
A. Accept the engagement but document her objections in the engagement letter to
limit her liability.
B. Accept the engagement at the triple fee because the Code permits CPAs to set their
own fees based on client risk. ✓ CORRECT
,C. Decline the engagement because accepting would compromise her integrity and
objectivity.
D. Prepare the statements as requested but issue a disclaimer of opinion to avoid
responsibility.
Correct Answer: C
Rationale: The AICPA Code requires CPAs to maintain integrity and objectivity, and Rule
102 explicitly prohibits a member from knowingly misrepresenting facts or
subordinating judgment to others. While the triple fee might seem tempting, the Code
does not permit fee magnitude to override ethical duties. A disclaimer of opinion does
not absolve a CPA from knowingly participating in a misstatement, and documenting
objections does not cure the ethical violation of issuing false financial information.
Question 2 of 200
James Ortiz, a 42-year-old partner at a regional firm, is reviewing the firm's new
marketing brochure. The brochure states that the firm "guarantees the lowest tax
liability legally possible for every client" and includes a testimonial from a client who
claims the firm saved her business from bankruptcy. James is concerned about
whether these statements comply with the AICPA Code. Which of the following
statements best describes the Code's position?
A. Both the guarantee and the testimonial are permitted because they represent truthful
client experiences.
B. The guarantee is prohibited but the testimonial is permitted because the client
voluntarily provided it.
C. The guarantee is prohibited because it creates unjustified expectations, while the
testimonial may also be prohibited if it is misleading. ✓ CORRECT
D. Both are permitted as long as the firm includes a disclaimer that results may vary by
client.
Correct Answer: C
,Rationale: Rule 502 of the AICPA Code prohibits advertising that is false, misleading, or
deceptive, including claims that create unjustified expectations of favorable results. A
guarantee of the lowest tax liability creates an unjustified expectation that the CPA can
control outcomes determined by tax law and facts. Testimonials are permitted only if
they are not misleading; if the testimonial implies the firm has special influence or
guaranteed results, it would also violate the rule.
Question 3 of 200
A 29-year-old staff accountant named Priya Patel discovers that her firm has been
billing a client for 50 hours of audit work on a project where she personally logged only
32 hours. Her supervisor instructed her to "smooth the hours" across the team to meet
the budget. Priya believes this overbilling violates the Code but is afraid of retaliation.
Under the AICPA Code's ethical principles, which principle most directly supports Priya's
obligation to address this issue?
A. The principle of the public interest, because overbilling harms the general public's
trust in the profession.
B. The principle of integrity, because it requires CPAs to be honest and straightforward
in all professional relationships. ✓ CORRECT
C. The principle of due care, because it requires CPAs to observe technical standards in
all engagements.
D. The principle of scope and nature of services, because it limits services to those a
CPA is competent to perform.
Correct Answer: B
Rationale: The principle of integrity in the AICPA Code obligates members to be honest
and candid within the constraints of client confidentiality, and subordination of
judgment to conceal overbilling directly violates this principle. While due care and the
public interest are relevant, integrity is the most direct ethical foundation for refusing to
participate in dishonest billing practices. The scope and nature of services principle is
unrelated to billing honesty.
, Question 4 of 200
David Kim, a 55-year-old sole practitioner, has been the auditor for Riverside
Manufacturing for 12 years. Riverside's controller recently left, and the company asks
David to serve as interim controller for six months while they recruit a replacement.
David would report to the CFO and manage the accounting staff, prepare financial
statements, and oversee the general ledger. Under the AICPA Code, may David accept
this role while continuing as Riverside's auditor?
A. Yes, because the interim role is temporary and David has deep knowledge of the
client's operations.
B. Yes, provided David's staff perform the audit under his direction to preserve
independence.
C. No, because serving as interim controller and financial statement preparer creates a
management participation threat. ✓ CORRECT
D. No, but only if David plans to resume the audit immediately after the six-month period
ends.
Correct Answer: C
Rationale: The AICPA Code and its interpretations prohibit a CPA from accepting an
engagement that involves performing management functions or acting as a member of
client management, as this creates a management participation threat to independence
and integrity. Serving as interim controller with responsibility for the general ledger and
financial statement preparation is a classic management role that impairs
independence regardless of duration or whether the CPA plans to return to the audit
later.
Question 5 of 200
Rebecca Torres, a 38-year-old CPA, provides bookkeeping and tax services to a small
retail client. One afternoon, the client's owner mentions he is selling the business and
asks Rebecca to prepare a valuation report for the prospective buyer. The buyer is not
2026/2027 | Official Exam – Complete Q&A
with Rationales – Pass Guaranteed - A+
Graded
Total Questions: 200 | Time: 240 min | Pass: 75%
TABLE OF CONTENTS
Section 1 | AICPA Code of Professional Conduct | Q1 – Q50
Section 2 | Independence, Integrity, and Objectivity | Q51 – Q100
Section 3 | Ethical Standards for Tax Practice (Circular 230) | Q101 – Q150
Section 4 | Professional Responsibilities and Disciplinary Actions | Q151 – Q200
Instructions: Choose the single best answer. Pass: 75% in 240 minutes.
══════════════════════════════════════
SECTION 1: AICPA CODE OF PROFESSIONAL CONDUCT Q1 – Q50
══════════════════════════════════════
Question 1 of 200
Maya Chen, a 34-year-old CPA in private practice, is approached by a prospective client
who owns a chain of restaurants. The client asks Maya to prepare financial statements
that understate liabilities by 15% so the business can qualify for a favorable lease. Maya
explains that such a misstatement would violate professional standards, but the client
insists it is a one-time request and offers to pay triple her normal fee. Under the AICPA
Code of Professional Conduct, what is Maya's most appropriate course of action?
A. Accept the engagement but document her objections in the engagement letter to
limit her liability.
B. Accept the engagement at the triple fee because the Code permits CPAs to set their
own fees based on client risk. ✓ CORRECT
,C. Decline the engagement because accepting would compromise her integrity and
objectivity.
D. Prepare the statements as requested but issue a disclaimer of opinion to avoid
responsibility.
Correct Answer: C
Rationale: The AICPA Code requires CPAs to maintain integrity and objectivity, and Rule
102 explicitly prohibits a member from knowingly misrepresenting facts or
subordinating judgment to others. While the triple fee might seem tempting, the Code
does not permit fee magnitude to override ethical duties. A disclaimer of opinion does
not absolve a CPA from knowingly participating in a misstatement, and documenting
objections does not cure the ethical violation of issuing false financial information.
Question 2 of 200
James Ortiz, a 42-year-old partner at a regional firm, is reviewing the firm's new
marketing brochure. The brochure states that the firm "guarantees the lowest tax
liability legally possible for every client" and includes a testimonial from a client who
claims the firm saved her business from bankruptcy. James is concerned about
whether these statements comply with the AICPA Code. Which of the following
statements best describes the Code's position?
A. Both the guarantee and the testimonial are permitted because they represent truthful
client experiences.
B. The guarantee is prohibited but the testimonial is permitted because the client
voluntarily provided it.
C. The guarantee is prohibited because it creates unjustified expectations, while the
testimonial may also be prohibited if it is misleading. ✓ CORRECT
D. Both are permitted as long as the firm includes a disclaimer that results may vary by
client.
Correct Answer: C
,Rationale: Rule 502 of the AICPA Code prohibits advertising that is false, misleading, or
deceptive, including claims that create unjustified expectations of favorable results. A
guarantee of the lowest tax liability creates an unjustified expectation that the CPA can
control outcomes determined by tax law and facts. Testimonials are permitted only if
they are not misleading; if the testimonial implies the firm has special influence or
guaranteed results, it would also violate the rule.
Question 3 of 200
A 29-year-old staff accountant named Priya Patel discovers that her firm has been
billing a client for 50 hours of audit work on a project where she personally logged only
32 hours. Her supervisor instructed her to "smooth the hours" across the team to meet
the budget. Priya believes this overbilling violates the Code but is afraid of retaliation.
Under the AICPA Code's ethical principles, which principle most directly supports Priya's
obligation to address this issue?
A. The principle of the public interest, because overbilling harms the general public's
trust in the profession.
B. The principle of integrity, because it requires CPAs to be honest and straightforward
in all professional relationships. ✓ CORRECT
C. The principle of due care, because it requires CPAs to observe technical standards in
all engagements.
D. The principle of scope and nature of services, because it limits services to those a
CPA is competent to perform.
Correct Answer: B
Rationale: The principle of integrity in the AICPA Code obligates members to be honest
and candid within the constraints of client confidentiality, and subordination of
judgment to conceal overbilling directly violates this principle. While due care and the
public interest are relevant, integrity is the most direct ethical foundation for refusing to
participate in dishonest billing practices. The scope and nature of services principle is
unrelated to billing honesty.
, Question 4 of 200
David Kim, a 55-year-old sole practitioner, has been the auditor for Riverside
Manufacturing for 12 years. Riverside's controller recently left, and the company asks
David to serve as interim controller for six months while they recruit a replacement.
David would report to the CFO and manage the accounting staff, prepare financial
statements, and oversee the general ledger. Under the AICPA Code, may David accept
this role while continuing as Riverside's auditor?
A. Yes, because the interim role is temporary and David has deep knowledge of the
client's operations.
B. Yes, provided David's staff perform the audit under his direction to preserve
independence.
C. No, because serving as interim controller and financial statement preparer creates a
management participation threat. ✓ CORRECT
D. No, but only if David plans to resume the audit immediately after the six-month period
ends.
Correct Answer: C
Rationale: The AICPA Code and its interpretations prohibit a CPA from accepting an
engagement that involves performing management functions or acting as a member of
client management, as this creates a management participation threat to independence
and integrity. Serving as interim controller with responsibility for the general ledger and
financial statement preparation is a classic management role that impairs
independence regardless of duration or whether the CPA plans to return to the audit
later.
Question 5 of 200
Rebecca Torres, a 38-year-old CPA, provides bookkeeping and tax services to a small
retail client. One afternoon, the client's owner mentions he is selling the business and
asks Rebecca to prepare a valuation report for the prospective buyer. The buyer is not
