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Question 1
When a member performs nonattest services for an attest client, certain things are required from the client with
respect to such nonattest services. Which, if any, of the following is not one of the general requirements from the
client?
• A) Accept responsibility for the results of the services.
• B) Evaluate the results of the services
• C) Designate an individual who possesses suitable skill, knowledge, and/or experience, preferably with senior
management to oversee the services.
• D) All of the above are required.
Question 2
A public accounting firm has offices in Portland and Sacramento. Members of the accounting firm have the following loans to or from officers or
directors of a Sacramento audit client. The Sacramento office handles all of the work for this client. A Portland partner has loaned $5,000 to a
member of the board of directors. A Sacramento professional staff person, who does no work for this client, has borrowed $3,000 from the
president of this company.Which one, if any, of the above loans would impair the firm's independence with this client?
• A) The Portland partner's loan does not impair independence and the Sacramento professional staff
person's loan
impairs independence
•
B) Both the Portland partner's and the Sacramento professional staff person's loans would impair
independence.
•
C) Neither the Portland partner's nor the Sacramento professional staff person's loans would impair
independence.
•
D) The Portland partner's loan impairs independence and the Sacramento professional staff person's
loan does not impair independence
Question 3
A complaint was filed with the AICPA accusing the treasurer of Jam Jelly, a member, with violating integrity and
objectivity under Rule
102. An investigation by the AICPA's Professional Ethics Division revealed that the treasurer had told Jam Jelly's
president that Jam Jelly would have a loss for the period, not the profit that had been forecasted. The president
instructed the treasurer to have the value of the inventory increased in the amount needed to make the book income
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meet the forecasted profit. The treasurer had the bookkeeper make the necessary entry, an amount material to Jam
Jelly's financial statements. Which of the following statements is correct?
• A) The treasurer is not practicing public accounting, and thus the integrity or objectivity rule does not apply to him.
• B) The treasurer was merely following the president's instructions, and therefore the treasurer did not violate integrity or
objectivity.
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• C) The treasurer violated integrity or objectivity by directing another person to make a false entry in Jam Jelly's records.
• D) The entry was made by the bookkeeper, and thus the treasurer did not violate integrity or objectivity.
Question 4
Jen Walters, a member, is controller of Usher Company. Grey & Grey, CPAs are the auditors of Usher Company. On the last day of the field work of
the Usher Company audit, Robert Wright, the manager of the audit team asks Jen Walters if she is aware of any additional items that have not
been disclosed to the auditors that could have a material effect on the financial statements. Jen Walters says she is not aware of any such items.
Jen Walters, however, knows the cost of some major repairs to one of their plants has not been paid and the accounting department has not as yet
received an invoice for that work. She suspects that the president of the company is holding the invoice and will continue to do so until after the
current year's audit is completed. The repairs to the plant were completed a couple of months ago and the cost of them would have a material
effect on the current year's earnings.
• A) Since Jen Walters' statement to Robert Wright was a general one, i.e., she was not aware of any
undisclosed items,
and it was not in writing, Jen Walters has not violated the Code of Professional Conduct.
•
B) Since the Code of Professional Conduct applies only to members in the practice of public accounting,
its rules do not
apply to Jen Walters.
•
C) The Code of Professional Conduct does not cover this type of situation.
•
D) Jen Walters has violated the Code of Professional Conduct by failing to disclose to Grey &
Grey, CPAs the unrecorded liability for the repair work.
Question 5
Ginsberg, a manager, serves on the board of tax appeals. A tax client of her firm appears before the board appealing the assessed
value of his property. Since he is solely a tax client, independence is not required. What must Ginsberg do to avoid violating the
Code of Professional Conduct?
• A) Ginsberg must receive the consent of the board and the client to participate as a board member on this appeal.
B) Ginsberg must disclose this relationship to the client and the board.
•
C) Neither (a) nor (b) is required of Ginsberg
•
D) Ginsberg is required to do both (a) and (b)
Question 6
•
Gamba, a member in public practice, wants to increase the size of her practice. To facilitate this process, she purchases business lists and hires two
telemarketers to contact the people on the lists to offer Gamba's professional services. Which of the following statements is correct:
• A) Telemarketing is unprofessional and should not be undertaken by a member in public practice
Question 1
When a member performs nonattest services for an attest client, certain things are required from the client with
respect to such nonattest services. Which, if any, of the following is not one of the general requirements from the
client?
• A) Accept responsibility for the results of the services.
• B) Evaluate the results of the services
• C) Designate an individual who possesses suitable skill, knowledge, and/or experience, preferably with senior
management to oversee the services.
• D) All of the above are required.
Question 2
A public accounting firm has offices in Portland and Sacramento. Members of the accounting firm have the following loans to or from officers or
directors of a Sacramento audit client. The Sacramento office handles all of the work for this client. A Portland partner has loaned $5,000 to a
member of the board of directors. A Sacramento professional staff person, who does no work for this client, has borrowed $3,000 from the
president of this company.Which one, if any, of the above loans would impair the firm's independence with this client?
• A) The Portland partner's loan does not impair independence and the Sacramento professional staff
person's loan
impairs independence
•
B) Both the Portland partner's and the Sacramento professional staff person's loans would impair
independence.
•
C) Neither the Portland partner's nor the Sacramento professional staff person's loans would impair
independence.
•
D) The Portland partner's loan impairs independence and the Sacramento professional staff person's
loan does not impair independence
Question 3
A complaint was filed with the AICPA accusing the treasurer of Jam Jelly, a member, with violating integrity and
objectivity under Rule
102. An investigation by the AICPA's Professional Ethics Division revealed that the treasurer had told Jam Jelly's
president that Jam Jelly would have a loss for the period, not the profit that had been forecasted. The president
instructed the treasurer to have the value of the inventory increased in the amount needed to make the book income
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meet the forecasted profit. The treasurer had the bookkeeper make the necessary entry, an amount material to Jam
Jelly's financial statements. Which of the following statements is correct?
• A) The treasurer is not practicing public accounting, and thus the integrity or objectivity rule does not apply to him.
• B) The treasurer was merely following the president's instructions, and therefore the treasurer did not violate integrity or
objectivity.
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• C) The treasurer violated integrity or objectivity by directing another person to make a false entry in Jam Jelly's records.
• D) The entry was made by the bookkeeper, and thus the treasurer did not violate integrity or objectivity.
Question 4
Jen Walters, a member, is controller of Usher Company. Grey & Grey, CPAs are the auditors of Usher Company. On the last day of the field work of
the Usher Company audit, Robert Wright, the manager of the audit team asks Jen Walters if she is aware of any additional items that have not
been disclosed to the auditors that could have a material effect on the financial statements. Jen Walters says she is not aware of any such items.
Jen Walters, however, knows the cost of some major repairs to one of their plants has not been paid and the accounting department has not as yet
received an invoice for that work. She suspects that the president of the company is holding the invoice and will continue to do so until after the
current year's audit is completed. The repairs to the plant were completed a couple of months ago and the cost of them would have a material
effect on the current year's earnings.
• A) Since Jen Walters' statement to Robert Wright was a general one, i.e., she was not aware of any
undisclosed items,
and it was not in writing, Jen Walters has not violated the Code of Professional Conduct.
•
B) Since the Code of Professional Conduct applies only to members in the practice of public accounting,
its rules do not
apply to Jen Walters.
•
C) The Code of Professional Conduct does not cover this type of situation.
•
D) Jen Walters has violated the Code of Professional Conduct by failing to disclose to Grey &
Grey, CPAs the unrecorded liability for the repair work.
Question 5
Ginsberg, a manager, serves on the board of tax appeals. A tax client of her firm appears before the board appealing the assessed
value of his property. Since he is solely a tax client, independence is not required. What must Ginsberg do to avoid violating the
Code of Professional Conduct?
• A) Ginsberg must receive the consent of the board and the client to participate as a board member on this appeal.
B) Ginsberg must disclose this relationship to the client and the board.
•
C) Neither (a) nor (b) is required of Ginsberg
•
D) Ginsberg is required to do both (a) and (b)
Question 6
•
Gamba, a member in public practice, wants to increase the size of her practice. To facilitate this process, she purchases business lists and hires two
telemarketers to contact the people on the lists to offer Gamba's professional services. Which of the following statements is correct:
• A) Telemarketing is unprofessional and should not be undertaken by a member in public practice
