#1. Gail (an audit manager) has been assigned to the audit of Tandem
Electric, Inc. Gail is concerned that Frank, a friend from her local tennis club,
is in the management group of Tandem Electric. She believes she should
apply the AICPA conceptual framework but is uncertain how to do so. What
should Gail do first in this situation?
A. She should obtain a sworn statement from Frank.
B. She should identify threats to her independence.
C. She should provide services to Tandem Electric.
D. She should obtain a written waiver from her firm’s general counsel.
Is my answer B correct?
#2. Which part of the AICPA Code of Professional Conduct applies to
members in business?
A. Part 2.
B. Part 0.
C. Part 3.
D. Part 1.
Is my answer A correct?
#3. Nancy is the controller of a small consulting firm. Her boss, Juan, instructs her to
decrease the company's accounts payable for an amount that is material to the
financial statements. She is provided no backup documentation or explanation and,
after discussing the matter with Juan, refuses to make the adjustment on the grounds
that it would make the financial statements misleading under generally accepted
accounting principles (GAAP). Which statement best describes the most likely reason
for Nancy's action?
A. She resents being told what to do.
B. She recognizes an ethical issue.
C. She does not feel competent to make the entry.
D. She failed to consider other accounting rules.
Is my answer B correct?
#4 Which body develops independence rules that apply to attest engagements
performed on employee benefit plans?
A. U.S. Federal Deposit Insurance Agency.
B. U.S. Department of the Treasury.
C. U.S. Government Accountability Office.
D. U.S. Department of the Labor.
Is my answer D correct?
#5. Once you have considered the alternative approaches to the ethical issue, which
step should you perform next?
A. Consider the impact of the ethical issue on the relevant stakeholders.
B. Make a decision about the ethical issue.
C. Identify the people or organizations that will benefit or be harmed by the ethical
issue.
D. Gather the critical information involved with the ethical issue.
, Is my answer A correct?
#6. Josie is an accounting supervisor at Monk & Sons Realty. She instructs her
subordinate, Maria, to make certain accounting entries in the company's books that will
increase revenue by a material amount. Maria researches the matter and tells Josie
that recognizing revenue in this way would be inconsistent with GAAP. Josie disagrees
and insists that she record the entries. Maria brings her concerns to higher levels of
management and the board of directors, but no one agrees with her. She also discusses
the matter with the AICPA's technical hotline and confirms her position. Because she
has exhausted all her options, what else should Maria consider under the AICPA Code of
Professional Conduct?
A. Report the matter to the board of accountancy.
B. Make the entries as her boss instructed.
C. Take out a professional liability policy.
D. Resign her position in the company.
Is my answer D correct?
#7. Your employer is a social media company. In performing the company's audit, you
find evidence that the client failed to comply with a state regulation. Under which
instance would the client's failure be considered possible noncompliance with laws and
regulations (NOCLAR)?
A. The client's failure to comply does not fit within the scope of the NOCLAR
interpretation.
B. The client's failure to comply with the regulation is clearly inconsequential.
C. The individual who failed to comply with the regulation was a contractor, not an
employee.
D. The individual who failed to comply with the regulation was the vice chair of the
company's board.
Is my answer D correct?
#8. Sophie, the CFO of Slalom Ski Supplies, is offered a watch by one of her company's
vendors. The gift card congratulates her on Slalom's recent merger with another
company. To determine whether accepting the watch would create a significant threat
to her compliance with the AICPA code, which factor should Sophie consider?
A.Whether anyone knows that she received the gift.
B.Whether the gift cost more than $400.
C.Whether the gift was reasonable in the circumstances.
D.Whether she truly earned and deserved the gift.
Is my answer C correct?
#9. You identify a potential conflict of interest before performing tax services for a
client. According to the “Conflicts of Interest” interpretation, what should you ask
yourself next?
A. What safeguards might reduce threats to at an acceptable level?
B. Has the company's management provided their consent?
C. Should you obtain a waiver to perform the tax services engagement?
D. Are threats to your compliance with the AICPA code at an acceptable level?
Electric, Inc. Gail is concerned that Frank, a friend from her local tennis club,
is in the management group of Tandem Electric. She believes she should
apply the AICPA conceptual framework but is uncertain how to do so. What
should Gail do first in this situation?
A. She should obtain a sworn statement from Frank.
B. She should identify threats to her independence.
C. She should provide services to Tandem Electric.
D. She should obtain a written waiver from her firm’s general counsel.
Is my answer B correct?
#2. Which part of the AICPA Code of Professional Conduct applies to
members in business?
A. Part 2.
B. Part 0.
C. Part 3.
D. Part 1.
Is my answer A correct?
#3. Nancy is the controller of a small consulting firm. Her boss, Juan, instructs her to
decrease the company's accounts payable for an amount that is material to the
financial statements. She is provided no backup documentation or explanation and,
after discussing the matter with Juan, refuses to make the adjustment on the grounds
that it would make the financial statements misleading under generally accepted
accounting principles (GAAP). Which statement best describes the most likely reason
for Nancy's action?
A. She resents being told what to do.
B. She recognizes an ethical issue.
C. She does not feel competent to make the entry.
D. She failed to consider other accounting rules.
Is my answer B correct?
#4 Which body develops independence rules that apply to attest engagements
performed on employee benefit plans?
A. U.S. Federal Deposit Insurance Agency.
B. U.S. Department of the Treasury.
C. U.S. Government Accountability Office.
D. U.S. Department of the Labor.
Is my answer D correct?
#5. Once you have considered the alternative approaches to the ethical issue, which
step should you perform next?
A. Consider the impact of the ethical issue on the relevant stakeholders.
B. Make a decision about the ethical issue.
C. Identify the people or organizations that will benefit or be harmed by the ethical
issue.
D. Gather the critical information involved with the ethical issue.
, Is my answer A correct?
#6. Josie is an accounting supervisor at Monk & Sons Realty. She instructs her
subordinate, Maria, to make certain accounting entries in the company's books that will
increase revenue by a material amount. Maria researches the matter and tells Josie
that recognizing revenue in this way would be inconsistent with GAAP. Josie disagrees
and insists that she record the entries. Maria brings her concerns to higher levels of
management and the board of directors, but no one agrees with her. She also discusses
the matter with the AICPA's technical hotline and confirms her position. Because she
has exhausted all her options, what else should Maria consider under the AICPA Code of
Professional Conduct?
A. Report the matter to the board of accountancy.
B. Make the entries as her boss instructed.
C. Take out a professional liability policy.
D. Resign her position in the company.
Is my answer D correct?
#7. Your employer is a social media company. In performing the company's audit, you
find evidence that the client failed to comply with a state regulation. Under which
instance would the client's failure be considered possible noncompliance with laws and
regulations (NOCLAR)?
A. The client's failure to comply does not fit within the scope of the NOCLAR
interpretation.
B. The client's failure to comply with the regulation is clearly inconsequential.
C. The individual who failed to comply with the regulation was a contractor, not an
employee.
D. The individual who failed to comply with the regulation was the vice chair of the
company's board.
Is my answer D correct?
#8. Sophie, the CFO of Slalom Ski Supplies, is offered a watch by one of her company's
vendors. The gift card congratulates her on Slalom's recent merger with another
company. To determine whether accepting the watch would create a significant threat
to her compliance with the AICPA code, which factor should Sophie consider?
A.Whether anyone knows that she received the gift.
B.Whether the gift cost more than $400.
C.Whether the gift was reasonable in the circumstances.
D.Whether she truly earned and deserved the gift.
Is my answer C correct?
#9. You identify a potential conflict of interest before performing tax services for a
client. According to the “Conflicts of Interest” interpretation, what should you ask
yourself next?
A. What safeguards might reduce threats to at an acceptable level?
B. Has the company's management provided their consent?
C. Should you obtain a waiver to perform the tax services engagement?
D. Are threats to your compliance with the AICPA code at an acceptable level?
