Question 1

If a CPA is expelled from his or her provincial institute, what does that mean in practical terms?

Accepted Answer

The answer of If a CPA is expelled from his...

Question 2

Discuss the deficiencies in professional codes of conduct for public accountants (PAs).

Accepted Answer

The answer of Discuss the deficiencies in professional codes of...

Question 3

Independence is not impaired if a public accountant (PA) serves on an organization's board of directors.

Accepted Answer

According to the AICPA's Code of Professional Conduct, serving on an organization's board of directors creates a self-review threat, which impairs independence. Therefore, a public accountant (PA) serving on a board of directors should not provide services related to that organization.

Question 4

Summarize the professional competence and due care rules of the codes of conduct.

Accepted Answer

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Question 5

Successor auditors are required to make certain enquiries of predecessor auditors when a new client is obtained.

Accepted Answer

According to auditing standards, successor auditors are required to make certain enquiries of predecessor auditors when a new client is obtained in order to assess the risk of material misstatement in the financial statements and to evaluate the integrity of management. These enquiries include obtaining information about the prior year's audit, any disagreements with management, and any communication with regulatory or legal authorities.

Question 6

Discuss the rules allowing members to practice in any form of organization.

Accepted Answer

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Question 7

Discuss communications between predecessor and successor auditors.

Accepted Answer

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Question 8

Confidentiality principles allow a PA to ignore the obligation to comply with a validly issued subpoena or summons.

Accepted Answer

Confidentiality principles do not allow a PA to ignore a validly issued subpoena or summons, and in fact, a PA must comply with such legal orders while attempting to protect patient confidentiality to the greatest extent possible within the confines of the law.

Question 9

Firms commonly obtain new clients through advertising.

Accepted Answer

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Question 10

Any complaint against a member must be submitted in writing.

Accepted Answer

According to the given statement, any complaint against a member must be submitted in writing, indicating that written form is required.

Question 11

Describe how actual or threatened litigation affects auditor independence.

Accepted Answer

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Question 12

Discuss self-regulation discipline and public regulation discipline.

Accepted Answer

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Question 13

When a public accountant (PA) and a client move into an adversary relationship and away from the cooperative one needed in an assurance engagement, independence is threatened by appearances of the PA trying to serve his or her own best interests.

Accepted Answer

When a PA and client have an adversary relationship, it creates a conflict of interest that threatens the independence of the PA. The PA must maintain a cooperative relationship with the client to ensure they are serving the public's best interests and not their own.

Question 14

The CPA Ontario Rules of Professional Conduct prohibit CAs from accepting contingency fees under any and all circumstances.

Accepted Answer

The CPA Ontario Rules of Professional Conduct do allow for contingency fees under certain conditions, such as when the fee relates to services for which the firm provides and the client agrees in writing, but there are restrictions, particularly regarding assurance engagements.

Question 15

Briefly describe the process followed by CPA Ontario when investigating and charging a member with violating one of the rules of professional conduct.

Accepted Answer

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Question 16

Whenever there is a conflict-of-interest situation for the auditor, there is a potential to create a threat to the auditor's independent state of mind.

Accepted Answer

A conflict of interest arises when an individual or entity is involved in multiple interests, and serving one interest could involve working against another. In the case of an auditor, a conflict of interest can create a threat to their independence as it may affect their ability to impartially provide audit services. Therefore, it is true that a conflict-of-interest situation for the auditor creates a potential threat to their independent state of mind.

Question 17

Under the limited liability partnership (LLP) form of organization, the only partners with personal assets at risk are those involved in the litigated engagement, while the others risk only their investment in the partnership.

Accepted Answer

This statement is true. In an LLP, partners are only personally liable for the debts or obligations of the partnership if they were directly involved in the actions that led to the liability. Other partners who were not involved only risk their investment in the partnership.

Question 18

A public accountant (PA) in a large firm has been asked to take over the audit of a client in the pharmaceutical industry from another PA who quit abruptly. The PA is unfamiliar with the pharmaceutical industry. The PA should trust that the work was properly planned by the previous PA and should follow that plan carefully.

Accepted Answer

The PA should not blindly trust that the work was properly planned by the previous PA, especially since the previous PA quit abruptly. The new PA should carefully review the previous PA's work and plan to ensure it is appropriate for the client and make any necessary adjustments.

Question 19

Specific items in the rules of conduct may not necessarily be based on one of the ethics principles, but, instead, they may involve various elements of different ethical theories.

Accepted Answer

Rules of conduct may involve various elements of different ethical theories, rather than a single ethics principle.

Question 20

As self-regulating bodies, professional institutes have a duty to investigate all written complaints received about their members and students accepted into their programs.

Accepted Answer

As self-regulating bodies, professional institutes have a duty to investigate all written complaints received about their members and students accepted into their programs.

Quiz 18: Professional Rules of Conduct Details and Auditor Responsibilities

If a CPA is expelled from his or her provincial institute, what does that mean in practical terms?

Discuss the deficiencies in professional codes of conduct for public accountants (PAs).

Independence is not impaired if a public accountant (PA) serves on an organization's board of directors.

Summarize the professional competence and due care rules of the codes of conduct.

Successor auditors are required to make certain enquiries of predecessor auditors when a new client is obtained.

Discuss the rules allowing members to practice in any form of organization.

Discuss communications between predecessor and successor auditors.

Confidentiality principles allow a PA to ignore the obligation to comply with a validly issued subpoena or summons.

Firms commonly obtain new clients through advertising.

Any complaint against a member must be submitted in writing.

Describe how actual or threatened litigation affects auditor independence.

Discuss self-regulation discipline and public regulation discipline.

When a public accountant (PA) and a client move into an adversary relationship and away from the cooperative one needed in an assurance engagement, independence is threatened by appearances of the PA trying to serve his or her own best interests.

The CPA Ontario Rules of Professional Conduct prohibit CAs from accepting contingency fees under any and all circumstances.

Briefly describe the process followed by CPA Ontario when investigating and charging a member with violating one of the rules of professional conduct.

Whenever there is a conflict-of-interest situation for the auditor, there is a potential to create a threat to the auditor's independent state of mind.

Under the limited liability partnership (LLP) form of organization, the only partners with personal assets at risk are those involved in the litigated engagement, while the others risk only their investment in the partnership.

Specific items in the rules of conduct may not necessarily be based on one of the ethics principles, but, instead, they may involve various elements of different ethical theories.

As self-regulating bodies, professional institutes have a duty to investigate all written complaints received about their members and students accepted into their programs.