Question 1

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

Accepted Answer

The AICPA Code of Professional Conduct is specifically created for members of the American Institute of Certified Public Accountants (AICPA) and is a standard of conduct that all members are required to adhere to. The IESBA Code of Conduct and the PCAOB Code of Professional Conduct are not necessarily applicable to AICPA members, and the SEC Code of Conduct is specific to employees of the Securities and Exchange Commission.

Question 2

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

Accepted Answer

Obtaining the relevant facts is the best first step in resolving an ethical dilemma because it allows for an objective understanding and analysis of the situation. Without the relevant facts, it may be difficult to identify the ethical issues, alternative actions, and potential consequences for those involved.

Question 3

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

Accepted Answer

While ethical frameworks provide a helpful guide for analyzing ethical issues, they do not necessarily always lead to the "appropriate" course of action as different frameworks may lead to different conclusions. In certain cases, ethical frameworks can be difficult to apply and may not provide clear solutions to complex ethical dilemmas. Ultimately, the decision on what course of action to take also involves personal judgment and reflection beyond following a specific framework.

Question 4

Ethical values such as caring have been incorporated into the laws, as caring now been defined enough to be legally enforceable.

Accepted Answer

While ethical values like caring influence the creation of laws, the abstract nature of caring makes it difficult to define and enforce legally in a precise manner. Laws tend to focus on actions rather than the motivations behind them.

Question 5

The likelihood of discovery and the consequences of unethical conduct can easily result in unethical conduct.

Accepted Answer

When individuals perceive that the likelihood of discovery and the consequences of unethical conduct are low, they may be more inclined to engage in unethical behavior. Conversely, when they perceive a high likelihood of discovery and severe consequences, they may be less likely to engage in unethical behavior. Therefore, the likelihood of discovery and the consequences of unethical conduct can easily result in unethical conduct.

Question 6

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

Accepted Answer

The statement accurately reflects the commonly recognized understanding of unethical behavior. Different people may have different moral norms and standards, which can lead to some variations in ethical judgments. However, the general principle is that unethical behavior is behavior that violates accepted norms, values, or codes of conduct, and causes harm or injustice to others or society as a whole.

Question 7

CPA firms have a similar relationship with the users of financial statements which they audit compared to the relationship other professionals have with their customers.

Accepted Answer

CPA firms have a unique relationship with the users of financial statements they audit because their primary responsibility is to the public and the integrity of the financial statements, rather than to the client company paying their fees. This differs from other professionals who typically have a direct service relationship primarily benefiting their clients.

Question 8

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

Accepted Answer

Integrity means having strong moral and ethical principles and sticking to them even in difficult situations. It involves being honest, fair, and consistent in one's behavior, and not compromising one's values for personal gain.

Question 9

Auditors and accountants do not face many ethical dilemmas during their respective business careers.

Accepted Answer

Auditors and accountants often face ethical dilemmas in their careers, such as conflicts of interest, client confidentiality, and pressure to overlook questionable financial practices. It is important for professionals in these fields to adhere to ethical standards and policies to maintain integrity and trust with their clients and the public.

Question 10

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

Accepted Answer

The main reason for a code of professional conduct is to gain public trust and confidence in the quality of service provided by the profession. It helps to maintain professional standards, ethical values, and professionalism in the industry. This, in turn, ensures that professionals act in a responsible and accountable manner, enhancing the reputation of the profession as a whole.

Question 11

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

Accepted Answer

Selfishness often leads individuals to prioritize their own goals and interests over the greater good or ethical considerations, leading them towards acting unethically.

Question 12

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

Accepted Answer

The argument that "everybody does it" is a classic example of the rationalization method known as the "bandwagon effect," which suggests that the mere fact that others are doing something makes it acceptable or even desirable. This can lead to unethical behavior because it allows individuals to justify their actions based on the actions of others, rather than considering the right or wrong of the situation on its own merits.

Question 13

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

Accepted Answer

Professionals are expected to adhere to ethical standards and codes of conduct and are held to a higher level of accountability for their actions and decisions. They are expected to act with integrity, honesty, and professionalism in all aspects of their work.

Question 14

PCAOB inspections, especially information related to future inspections which will be made by the PCAOB staff and personnel of public company audits, is publicly available information.

Accepted Answer

PCAOB inspections and specific details about future inspections, including which audits will be inspected, are not publicly disclosed to maintain the integrity and confidentiality of the inspection process.

Question 15

Users of financial statements believe that CPA firms reduce the information risk associated with financial statements.

Accepted Answer

Users of financial statements rely on CPA firms to provide independent and objective assurance that the financial statements are accurate and reliable. CPA firms conduct audits and provide opinions that can reduce the information risk associated with financial statements. Therefore, the statement is true.

Question 16

Ethics are

Accepted Answer

Ethics are a set of moral principles or values that guide behavior and decision making. They are important not just in professions but in all aspects of life, as they help individuals and society as a whole make choices that are morally and socially acceptable. Life experiences do play a role in forming one's ethical beliefs and values, but they can also be influenced by cultural and societal norms. While laws may incorporate ethical principles, ethics go beyond legal requirements and involve personal responsibility and values.

Question 17

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

Accepted Answer

All of the above options are examples of prescribed sets of moral principles or values. Codes of business ethics for professional groups outline the ethical standards that members of a particular occupation or industry should adhere to. Laws and regulations prescribe moral principles that are legally enforceable. Codes of conduct within an organization similarly lay out a set of moral values that employees are expected to follow in their day-to-day work.

Question 18

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

Accepted Answer

When a CPA is engaged to perform an audit of financial statements, the primary beneficiaries of the audit are those who rely on the financial statements. Although the CPA firm is engaged and paid by the client, their responsibilities do not include acting as an advocate for the client. Instead, the CPA must conduct the audit in accordance with the generally accepted auditing standards (GAAS) and provide an independent opinion on the fairness of the financial statements. In situations where there is no compelling standard, the CPA must exercise professional judgment to ensure that the financial statements are fairly presented, but their primary responsibility is to the users of the financial statements, not to the client or the FASB.

Question 19

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 20

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

Accepted Answer

Just because something is legal, it does not necessarily mean it is ethical. The law is created and enforced by society, whereas ethics are based on moral principles and personal values. There have been numerous examples throughout history where actions considered legal were later determined to be unethical.

Quiz 4: Professional Ethics