Question 1

Which of the following statements is True when the CPA has been engaged to perform an audit of financial statements?

Accepted Answer

When the CPA is engaged to perform an audit of financial statements, the primary beneficiaries of the audit are those who rely on the financial statements, such as shareholders, creditors, and investors. While the CPA firm is engaged and paid by the client, their responsibility is to provide an objective and independent assessment of the financial statements, and not to act as an advocate for the client. Additionally, the CPA is required to follow authoritative accounting standards and cannot endorse a choice solely in the investors' interests. The FASB sets accounting standards but the CPA's responsibility is to their client's financial statements.

Question 2

A six-step approach is often used to resolve an ethical dilemma.The first step in this process is to

Accepted Answer

The first step in resolving an ethical dilemma is to obtain the relevant facts. Without understanding the facts of the situation, it is impossible to identify the ethical issues, alternative actions, or stakeholders involved. Therefore, obtaining the relevant facts is the logical starting point for the six-step approach to resolving an ethical dilemma.

Question 3

If an action is considered legal,it must also be considered ethical.

Accepted Answer

It is possible for an action to be legal but not ethical. Legal and ethical considerations are two separate concepts. Legality refers to actions that abide by the law while ethics refers to actions that adhere to moral principles and values. There may be instances where an action is legal but not considered ethical by society or individuals.

Question 4

Explain why there is a special need for ethical conduct in the auditing profession.

Accepted Answer

The answer of Explain why there is a special need...

Question 5

One of the AICPA's Ethical Principles deals with the public interest.It states that members should accept the obligation to act in a way that will

Accepted Answer

The answer of One of the AICPA's Ethical Principles deals...

Question 6

Which of the following is not one of the major parts of the AICPA's Code of Professional Conduct?

Accepted Answer

The AICPA's Code of Professional Conduct consists of three major parts: principles, rules, and interpretations. Definitions are not one of the major parts.

Question 7

The ________ is a standard of conduct for all members of the AICPA.

Accepted Answer

The AICPA (American Institute of Certified Public Accountants) Code of Professional Conduct is a standard of conduct that governs the behavior of all members of the AICPA. It sets forth ethical principles and rules of conduct, including responsibilities to clients, confidentiality, integrity, objectivity, and professional competence. Options A, B, and C refer to codes of conduct for other organizations (IESBA - International Ethics Standards Board for Accountants, SEC - Securities and Exchange Commission, PCAOB - Public Company Accounting Oversight Board) and are not applicable to all members of the AICPA.

Question 8

A CPA performs bookkeeping services for a client and then performs an audit of those financial statements.This is an example of a ________ threat.

Accepted Answer

This is an example of a self-review threat because the CPA is reviewing their own work in the bookkeeping services and then auditing those same financial statements. This creates a risk that the CPA may not be objective in their audit due to familiarity with the information and bias towards their own work.

Question 9

The underlying reason for a code of professional conduct for any profession is

Accepted Answer

A code of professional conduct is designed to ensure that professionals maintain a high standard of ethical behavior and integrity, which helps to maintain public confidence in the quality of service provided by the profession. This is particularly important for professions that have a direct impact on public health, safety, and welfare. While licensing agencies may use a code of conduct to measure deficient behavior, this is not the primary reason for its existence. Similarly, while a code of conduct may help to keep unscrupulous people out of the profession, this is not the primary rationale. Finally, a code of conduct is not typically required by federal legislation, although certain professions may be subject to federal regulations that include ethical guidelines.

Question 10

Since the rules cannot address all circumstances,the Code includes a conceptual framework approach for members to use to evaluate threats to compliance.Using this framework,

Accepted Answer

The conceptual framework approach allows for the use of safeguards to eliminate or mitigate threats to compliance, but recognizes that more than one safeguard may be necessary depending on the circumstances. The first step is to identify and evaluate the nature and significance of the threat, followed by determining whether any safeguards can eliminate or sufficiently mitigate the threat. If not, the member may need to decline or terminate the specific professional service or relationship causing the threat.

Question 11

Describe an ethical dilemma that an auditor or an accountant might face in his or her business career,then illustrate how the auditor or accountant might use the six-step approach presented in the text to resolve that dilemma.Be specific.

Accepted Answer

The answer of Describe an ethical dilemma that an auditor...

Question 12

Which of the following is a prescribed set of moral principles or values?

Accepted Answer

All options listed are examples of prescribed sets of moral principles or values. Codes of business ethics for professional groups outline the expected behavior of professionals in their fields, laws and regulations are legal requirements for behavior, and codes of conduct within an organization establish ethical standards for employees to follow.

Question 13

Professionals are expected to conduct themselves at a higher level than most other members of society.

Accepted Answer

Professionals have a higher duty to uphold ethical and moral standards in their work and personal lives, as well as maintaining a level of expertise in their field of work. This expectation is often outlined in professional codes of conduct and can include consequences for failing to meet these standards.

Question 14

Which of the following is(are)True concerning the Ethical Principles of the Code of Professional Conduct?
I. They identify ideal conduct.
II. They are general ideals and are not enforceable.

Accepted Answer

The Ethical Principles in the Code of Professional Conduct identify ideal conduct, as stated in I. They are also general ideals and not enforceable, as stated in II. Therefore, both statements are true.

Question 15

A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."

Accepted Answer

Rationalizing unethical behavior based on the fact that others are doing it is a common fallacy known as the "bandwagon effect" or "appeal to common practice." This reasoning ignores the morality of the behavior and can lead to a slippery slope of unethical actions.

Question 16

Most people define unethical behavior as conduct that differs from what they believe is appropriate given the circumstances.

Accepted Answer

Generally, unethical behavior is defined as behavior that violates moral or ethical principles, such as honesty, fairness, or respect. What is considered unethical may vary depending on cultural norms, laws, and personal beliefs, but the underlying concept is that the behavior is not perceived as right or justifiable by most people.

Question 17

________ means that a person acts according to conscience,regardless of the situation.

Accepted Answer

Integrity means that a person is honest, ethical, and acts according to their principles and values, even when no one is watching. It involves being true to oneself and making decisions based on what is right, not just what is easy or convenient.

Question 18

Ethical frameworks help identify the ethical issues and will always lead to the appropriate course of action.

Accepted Answer

Ethical frameworks provide guidance in how to identify and approach ethical issues, but the appropriate course of action will depend on various factors and may not always be clear-cut. It is important to consider all relevant information and make well-reasoned ethical decisions.

Question 19

Ethics are

Accepted Answer

Ethics are a set of moral principles or values that guide the behavior of an individual or group. It is not limited to professions but is important for the functioning of society in general. While laws may incorporate ethical principles, ethics is not always incorporated in laws. Life experiences play a significant role in shaping one's ethical beliefs and values.

Question 20

One of the main reasons people act unethically is that they choose to act selfishly.

Accepted Answer

People often prioritize their own interests over ethical considerations or the well-being of others, which can lead to unethical behavior.

Quiz 4: Professional Ethics