1. Sarah, the controller of a large beverage supplier, supervises two employees. Her
boss, Vladimir, instructs her to increase the company's inventory balance for an amount that
is material to the financial statements by crediting several small "miscellaneous" expense
accounts. She does not understand why he wants her to make these entries but immediately
directs one of her staff to make them because she has been instructed to do so. Which of the
following statements best describes Sarah's actions?
2. Sarah failed to evaluate a potential ethical issue.
3. SarahfailedtoreferthemattertotheAICPAethicshotline.
4. Sarah failed to ensure that her staff was competent to make the entries.
5. Sarahfailedtoconsidertherulesofotherregulators.
6. Josie, an accounting supervisor in Monk & Sons Realty, instructs Maria, her employee,
to make certain accounting entries in the company's books that will increase revenue. Maria
researches the matter, confirming her concern that these entries would overstate revenue, and
informs Josie that recognizing revenue in this manner would be premature and not consistent
with generally accepted accounting principles (GAAP) but Josie disagrees and insists that
Maria record the entries. The amount of revenue is material to Monk's financial statements.
According to the AICPA rules, what should Maria do first?
7. Resign her position quietly.
8. Report the matter to the senior partner in the firm.
9. Take out a professional liability policy.
10. Discuss her concerns with Josie's boss.
1. The AICPA Code of Professional Conduct includes the following sections:
2. Preface, rules, and interpretations applicable to members in tax practice and members in
business.
3. Preface, rules, and interpretations applicable to members in public practice and members n
business.
4. Preface, rules, and interpretations applicable to members in tax practice and members in
audit practice.
5. Preface, rules, and interpretations applicable to members in audit practice and members in
business.
, 1. Which of the following statements best describes how the International Federation of
Accountants' (IFAC's) rules and standards impact the U.S. accounting profession?
2. Individual CPAs practicing in the United States are required to stay aware of IFAC
rules and standards and adopt them immediately.
3. StateboardsofaccountancyarerequiredtoadopttheIFAC'sruleswithin90daysoftheIFAC rule
change.
4. As a member body of IFAC, the AICPA is required to change its bylaws whenever the
IFAC changes its rules.
5. TheAICPAisrequiredtoadoptethicsandotherprofessionalstandardsthatareatleastas
restrictive as IFAC's.
6. Which of the following phrases is used by the Code of Professional Conduct to
describe integrity?
7. Candid, within the constraints of client confidentiality.
8. Forcefuladvocateoftheclient'sposition.
9. Valued business advisor to the client.
10. Willing to subordinate judgment to achieve a proper outcome.
11. Sophie, the CFO of Slolum Ski Supplies, received a watch from one of her company's
largest vendors, Colorado Ski Shoppe. She received the gift with a card congratulating her on
Slolum's recent merger with another company. In determining whether accepting the gift
would create a significant threat to her compliance with the AICPA code, which of the
following factors should Sophie consider?
12. Whether she disclosed receipt of the gift to the board of directors.
13. Whethershetrulyearnedthegift.
14. Whether the gift was reasonable in the circumstances.
15. Whetherthegiftcostmorethan$100.
16. Which of the following best describes competence as defined in the AICPA Code
of Professional Conduct?
a. Infallible judgment that cannot subsequently be called into question.
B.Theapplicationofskillandknowledgewithreasonablecareanddiligence.
c. Possessing an advanced college degree in the relevant subject matter.
boss, Vladimir, instructs her to increase the company's inventory balance for an amount that
is material to the financial statements by crediting several small "miscellaneous" expense
accounts. She does not understand why he wants her to make these entries but immediately
directs one of her staff to make them because she has been instructed to do so. Which of the
following statements best describes Sarah's actions?
2. Sarah failed to evaluate a potential ethical issue.
3. SarahfailedtoreferthemattertotheAICPAethicshotline.
4. Sarah failed to ensure that her staff was competent to make the entries.
5. Sarahfailedtoconsidertherulesofotherregulators.
6. Josie, an accounting supervisor in Monk & Sons Realty, instructs Maria, her employee,
to make certain accounting entries in the company's books that will increase revenue. Maria
researches the matter, confirming her concern that these entries would overstate revenue, and
informs Josie that recognizing revenue in this manner would be premature and not consistent
with generally accepted accounting principles (GAAP) but Josie disagrees and insists that
Maria record the entries. The amount of revenue is material to Monk's financial statements.
According to the AICPA rules, what should Maria do first?
7. Resign her position quietly.
8. Report the matter to the senior partner in the firm.
9. Take out a professional liability policy.
10. Discuss her concerns with Josie's boss.
1. The AICPA Code of Professional Conduct includes the following sections:
2. Preface, rules, and interpretations applicable to members in tax practice and members in
business.
3. Preface, rules, and interpretations applicable to members in public practice and members n
business.
4. Preface, rules, and interpretations applicable to members in tax practice and members in
audit practice.
5. Preface, rules, and interpretations applicable to members in audit practice and members in
business.
, 1. Which of the following statements best describes how the International Federation of
Accountants' (IFAC's) rules and standards impact the U.S. accounting profession?
2. Individual CPAs practicing in the United States are required to stay aware of IFAC
rules and standards and adopt them immediately.
3. StateboardsofaccountancyarerequiredtoadopttheIFAC'sruleswithin90daysoftheIFAC rule
change.
4. As a member body of IFAC, the AICPA is required to change its bylaws whenever the
IFAC changes its rules.
5. TheAICPAisrequiredtoadoptethicsandotherprofessionalstandardsthatareatleastas
restrictive as IFAC's.
6. Which of the following phrases is used by the Code of Professional Conduct to
describe integrity?
7. Candid, within the constraints of client confidentiality.
8. Forcefuladvocateoftheclient'sposition.
9. Valued business advisor to the client.
10. Willing to subordinate judgment to achieve a proper outcome.
11. Sophie, the CFO of Slolum Ski Supplies, received a watch from one of her company's
largest vendors, Colorado Ski Shoppe. She received the gift with a card congratulating her on
Slolum's recent merger with another company. In determining whether accepting the gift
would create a significant threat to her compliance with the AICPA code, which of the
following factors should Sophie consider?
12. Whether she disclosed receipt of the gift to the board of directors.
13. Whethershetrulyearnedthegift.
14. Whether the gift was reasonable in the circumstances.
15. Whetherthegiftcostmorethan$100.
16. Which of the following best describes competence as defined in the AICPA Code
of Professional Conduct?
a. Infallible judgment that cannot subsequently be called into question.
B.Theapplicationofskillandknowledgewithreasonablecareanddiligence.
c. Possessing an advanced college degree in the relevant subject matter.
