WGU D550 ETHICS FOR ACCOUNTANTS
OBJECTIVE ASSESSMENT (OA) FINAL
EXAM 2026/2027 EXAM TESTBANK
1. Which of the following best describes the fundamental principle of integrity
under the AICPA Code of Professional Conduct?
A) A member shall perform all professional duties with due care and competence.
B) A member shall be honest and candid within the constraints of client
confidentiality.
C) A member shall be straightforward and honest in all professional and
business relationships.
D) A member shall avoid any action that discredits the accounting profession.
Rationale: Integrity (AICPA) requires being straightforward and honest. Due care
is a separate principle. Honest and candid relates to objectivity. Avoiding
discreditable acts is a separate rule.
2. According to the IESBA Code, the “threats and safeguards approach” requires a
professional accountant to first:
A) Identify threats to compliance with fundamental principles.
B) Apply safeguards to eliminate all threats.
C) Document the ethical conflict resolution process.
D) Obtain written consent from the client before proceeding.
Rationale: The conceptual framework begins with identifying threats. Only then
can safeguards be evaluated.
3. An auditor discovers a material misstatement that the client refuses to correct.
Which action is most consistent with professional behavior?
A) Issue an unmodified opinion to avoid liability.
B) Withdraw from the engagement without disclosure.
C) Issue a qualified or adverse opinion explaining the misstatement.
D) Report the client to the SEC immediately without notice.
,Rationale: Professional behavior requires appropriate reporting. If client refuses
correction, auditor modifies opinion.
4. Which principle requires an accountant to maintain the highest level of technical
competence?
A) Integrity
B) Due Care
C) Objectivity
D) Confidentiality
Rationale: Due care requires competence, diligence, and continuing professional
development.
5. Under the AICPA Code, which threat occurs when an accountant promotes a
client’s position to the point of losing objectivity?
A) Self-interest threat
B) Advocacy threat
C) Familiarity threat
D) Intimidation threat
Rationale: Advocacy threat arises from promoting a client’s position (e.g., in
litigation or tax court).
6. A CPA provides tax services for a client and also serves on the client’s board of
directors. This creates a(n):
A) Self-review threat
B) Management participation threat
C) Advocacy threat
D) No threat if disclosed
Rationale: Making management decisions for an attest client creates a
management participation threat (also a form of self-review).
7. The IESBA fundamental principle of “professional behavior” requires an
accountant to:
,A) Comply with relevant laws and avoid actions that discredit the profession.
B) Keep all client information confidential.
C) Act in the public interest.
D) Maintain independence in appearance.
Rationale: Professional behavior includes complying with laws and avoiding
discreditable conduct.
8. A CPA firm audited a company for 20 years. The audit partner has become too
close to management. Which threat is most likely?
A) Self-interest threat
B) Familiarity threat
C) Advocacy threat
D) Self-review threat
Rationale: Long association leads to familiarity threat, impairing objectivity.
9. Which of the following is NOT a fundamental principle under the IESBA Code?
A) Integrity
B) Objectivity
C) Profitability
D) Professional Competence and Due Care
Rationale: IESBA principles: Integrity, Objectivity, Professional Competence,
Confidentiality, Professional Behavior.
10. A CPA owns 5% of the stock in a client that the firm audits. This is a direct
financial interest. The CPA must:
A) Dispose of the interest to maintain independence.
B) Disclose the interest in the audit report.
C) Transfer the interest to a blind trust.
D) Nothing, because 5% is immaterial.
Rationale: Any direct financial interest in an audit client violates independence,
regardless of materiality.
, 11. Which rule under the AICPA Code prohibits a CPA from knowingly making
false entries in a client’s records?
A) Integrity rule
B) Acts Discreditable rule
C) Confidentiality rule
D) Independence rule
Rationale: Knowingly making false entries is an act discreditable to the
profession.
12. A CPA firm provides bookkeeping services for an audit client. To avoid a
self-review threat, the firm must:
A) Ensure the client accepts responsibility for the financial statements.
B) Outsource the bookkeeping to a third party.
C) Obtain a waiver from the client.
D) Assign a different partner to the audit.
Rationale: The client must be able to make management decisions; the auditor
cannot assume management role.
13. The “conceptual framework” approach to ethics:
A) Requires identifying, evaluating, and addressing threats to compliance.
B) Lists prohibited activities without exception.
C) Applies only to tax practice.
D) Is used only by the SEC.
Rationale: Conceptual framework is flexible, threat-based, not rule-based.
14. Under the AICPA Code, a CPA may disclose confidential client information
without consent if:
A) The client has not paid fees.
B) The disclosure is required by a valid subpoena.
C) The CPA believes the client is unethical.
D) The information is more than five years old.
OBJECTIVE ASSESSMENT (OA) FINAL
EXAM 2026/2027 EXAM TESTBANK
1. Which of the following best describes the fundamental principle of integrity
under the AICPA Code of Professional Conduct?
A) A member shall perform all professional duties with due care and competence.
B) A member shall be honest and candid within the constraints of client
confidentiality.
C) A member shall be straightforward and honest in all professional and
business relationships.
D) A member shall avoid any action that discredits the accounting profession.
Rationale: Integrity (AICPA) requires being straightforward and honest. Due care
is a separate principle. Honest and candid relates to objectivity. Avoiding
discreditable acts is a separate rule.
2. According to the IESBA Code, the “threats and safeguards approach” requires a
professional accountant to first:
A) Identify threats to compliance with fundamental principles.
B) Apply safeguards to eliminate all threats.
C) Document the ethical conflict resolution process.
D) Obtain written consent from the client before proceeding.
Rationale: The conceptual framework begins with identifying threats. Only then
can safeguards be evaluated.
3. An auditor discovers a material misstatement that the client refuses to correct.
Which action is most consistent with professional behavior?
A) Issue an unmodified opinion to avoid liability.
B) Withdraw from the engagement without disclosure.
C) Issue a qualified or adverse opinion explaining the misstatement.
D) Report the client to the SEC immediately without notice.
,Rationale: Professional behavior requires appropriate reporting. If client refuses
correction, auditor modifies opinion.
4. Which principle requires an accountant to maintain the highest level of technical
competence?
A) Integrity
B) Due Care
C) Objectivity
D) Confidentiality
Rationale: Due care requires competence, diligence, and continuing professional
development.
5. Under the AICPA Code, which threat occurs when an accountant promotes a
client’s position to the point of losing objectivity?
A) Self-interest threat
B) Advocacy threat
C) Familiarity threat
D) Intimidation threat
Rationale: Advocacy threat arises from promoting a client’s position (e.g., in
litigation or tax court).
6. A CPA provides tax services for a client and also serves on the client’s board of
directors. This creates a(n):
A) Self-review threat
B) Management participation threat
C) Advocacy threat
D) No threat if disclosed
Rationale: Making management decisions for an attest client creates a
management participation threat (also a form of self-review).
7. The IESBA fundamental principle of “professional behavior” requires an
accountant to:
,A) Comply with relevant laws and avoid actions that discredit the profession.
B) Keep all client information confidential.
C) Act in the public interest.
D) Maintain independence in appearance.
Rationale: Professional behavior includes complying with laws and avoiding
discreditable conduct.
8. A CPA firm audited a company for 20 years. The audit partner has become too
close to management. Which threat is most likely?
A) Self-interest threat
B) Familiarity threat
C) Advocacy threat
D) Self-review threat
Rationale: Long association leads to familiarity threat, impairing objectivity.
9. Which of the following is NOT a fundamental principle under the IESBA Code?
A) Integrity
B) Objectivity
C) Profitability
D) Professional Competence and Due Care
Rationale: IESBA principles: Integrity, Objectivity, Professional Competence,
Confidentiality, Professional Behavior.
10. A CPA owns 5% of the stock in a client that the firm audits. This is a direct
financial interest. The CPA must:
A) Dispose of the interest to maintain independence.
B) Disclose the interest in the audit report.
C) Transfer the interest to a blind trust.
D) Nothing, because 5% is immaterial.
Rationale: Any direct financial interest in an audit client violates independence,
regardless of materiality.
, 11. Which rule under the AICPA Code prohibits a CPA from knowingly making
false entries in a client’s records?
A) Integrity rule
B) Acts Discreditable rule
C) Confidentiality rule
D) Independence rule
Rationale: Knowingly making false entries is an act discreditable to the
profession.
12. A CPA firm provides bookkeeping services for an audit client. To avoid a
self-review threat, the firm must:
A) Ensure the client accepts responsibility for the financial statements.
B) Outsource the bookkeeping to a third party.
C) Obtain a waiver from the client.
D) Assign a different partner to the audit.
Rationale: The client must be able to make management decisions; the auditor
cannot assume management role.
13. The “conceptual framework” approach to ethics:
A) Requires identifying, evaluating, and addressing threats to compliance.
B) Lists prohibited activities without exception.
C) Applies only to tax practice.
D) Is used only by the SEC.
Rationale: Conceptual framework is flexible, threat-based, not rule-based.
14. Under the AICPA Code, a CPA may disclose confidential client information
without consent if:
A) The client has not paid fees.
B) The disclosure is required by a valid subpoena.
C) The CPA believes the client is unethical.
D) The information is more than five years old.
