Question 1

The highest-order rights include rights granted by the government,such as civil rights,legal rights,rights to own property,and license privileges.

Accepted Answer

The answer of The highest-order rights include rights granted by...

Question 2

The first step in the ethical framework is to identify the ethical issue(s).

Accepted Answer

The first step in any ethical framework is identifying the ethical issue or problem that needs to be addressed. This is necessary in order to begin the process of analyzing the situation and determining the best course of action to take in order to address the issue in an ethical manner.

Question 3

A contingency fee is where no fee will be charged unless a specified finding or result is attained.

Accepted Answer

A contingency fee is a payment arrangement where the lawyer or law firm only receives payment for their services if they win a case, settle a case or obtain a specific result for the client. If they do not achieve a specified result, the client does not owe any fees.

Question 4

Rule 101 on integrity and objectivity only applies to covered members as defined by the AICPA.

Accepted Answer

The answer of Rule 101 on integrity and objectivity only...

Question 5

Under the AICPA Code of Professional Conduct,rules take precedent over principals.The principals need to only be considered when a rule is apparent.

Accepted Answer

The correct statement is that principles take precedence over rules in the AICPA Code of Professional Conduct. Rules are only to be applied when the issue cannot be resolved through the principles.

Question 6

An ethical problem is the same as an ethical dilemma.

Accepted Answer

An ethical problem involves a situation where the right course of action is clear, while an ethical dilemma involves a situation where there are two or more conflicting moral choices, making it difficult to determine the right course of action.

Question 7

Commissions and referral fees are allowed to audit firms as long as the fees are disclosed to the client's board and audit committee.

Accepted Answer

The answer of Commissions and referral fees are allowed to...

Question 8

An ethical dilemma occurs when there are conflicting moral duties or obligations.

Accepted Answer

An ethical dilemma arises when an individual is faced with a decision between two or more choices, where none of the options can be considered morally correct or ethically acceptable. In such situations, conflicting moral duties or obligations collide, making the choice challenging for the individual.

Question 9

If a member owns several shares of stock of a company during the first few months of the fiscal year under audit and then sells the shares before accepting the engagement,the firm does not violate the independence rules of the AICPA.

Accepted Answer

The independence rules of the AICPA require a CPA firm to maintain independence from its audit clients during the entire audit engagement period. If a member owns shares of stock of a company during the first few months of the fiscal year under audit but sells the shares before accepting the engagement, then the CPA firm is not considered to have violated the independence rules. However, if the member retains any financial interest in the company during the engagement period, then independence could be compromised.

Question 10

An ethical problem occurs when an individual is morally or ethically required to do something that conflicts with his or her immediate self-interest.

Accepted Answer

An ethical problem arises when an individual faces a situation where a moral or ethical obligation requires them to take action that may not align with their immediate self-interest or personal preferences.

Question 11

Rights theory focuses on evaluating actions in terms of the fundamental rights of the parties involved.

Accepted Answer

Rights theory holds that the most important aspect in determining the morality of an action is whether or not it respects the fundamental rights of the individuals involved.

Question 12

A covered member under the AICPA's rules includes individuals on the engagement team,any individual in a position to influence the engagement team,and all professional staff in the office of the engagement.

Accepted Answer

The answer of A covered member under the AICPA's rules...

Question 13

The AICPA may revoke a member's CPA license for violations of its Code of Professional Conduct.

Accepted Answer

The answer of The AICPA may revoke a member's CPA...

Question 14

An ethical problem occurs when an individual is morally or ethically required to do something that conflicts with the immediate security interests of others.

Accepted Answer

The answer of An ethical problem occurs when an individual...

Question 15

There is a hierarchy of rights to consider when applying rights theory.

Accepted Answer

Rights theory posits that certain fundamental rights exist that should be protected and respected. However, there can be conflicts between different rights, and a hierarchy of rights can help determine which rights should be prioritized in such situations. For example, free speech may be limited in cases where it directly causes harm to others, as protecting the right to safety may take precedence over the right to speak freely.

Question 16

Contingent fees are prohibited for any client for which the auditor performs attestation services.

Accepted Answer

According to the AICPA Code of Professional Conduct, contingent fees are prohibited for any client for which the auditor provides attestation services. The prohibition is in place to ensure that the auditor maintains objectivity and independence in their examination of the client's financial statements or other information.

Question 17

Only covered members as defined by the AICPA are required to comply with its independence rules.

Accepted Answer

The AICPA's independence rules only apply to covered members, which include individuals and entities that perform certain roles in relation to an attest client. Non-covered members (such as administrative personnel or non-CPA staff) are not subject to these rules.

Question 18

Utilitarian theory is an approach for addressing ethical problems by identifying a hierarchy of rights that should be considered in solving ethical problems or dilemmas.

Accepted Answer

Utilitarian theory is actually an approach for making ethical decisions by evaluating the outcomes of different options and choosing the option that brings the greatest overall benefit to the largest number of people. It does not involve identifying a hierarchy of rights.

Question 19

The Sarbanes Oxley Act requires management to pre-approve any non-audit service by the auditor,including tax services not specifically prohibited.

Accepted Answer

The answer of The Sarbanes Oxley Act requires management to...

Question 20

CPAs are no longer able to practice as a sole proprietorship.

Accepted Answer

CPAs are still able to practice as a sole proprietorship. However, in some states, they may need to have a licensed CPA partner or employee in order to meet certain regulatory requirements.

Quiz 3: Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards