Certified Public Accountants (CPA) Ethics Practice Exam

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• If a client wants to take a tax position that was previously rejected by a court, what should the tax preparer do?
• What must a CPA do if they receive confidential information from a prospective client?
• What constitutes a "frivolous position" in tax matters?
• Compliance with the AICPA Code of Professional Conduct primarily depends on what?
• Which of the following can not be a result of a disciplinary action by a Trial Board?
• In preparing tax returns, what should a member consider when dealing with information from clients who have related ownership?
• When preparing financial statements for a new business with limited records, what is the CPA's responsibility regarding those records?
• Which relationship would generally not impair an accounting firm's independence with an audit client?
• What did Miller suggest Joe do with the distribution he received?
• If a CPA becomes executor of an estate after the president of a client dies, how does this affect independence?
• In a one-office CPA firm, if a partner has a brother who owns 26% of a company's stock, how does this affect independence?
• What must Iverson, CPA, report regarding her civil judgment?
• What authority does the AICPA's Management Consulting Services Executive Committee have regarding prohibited consulting services?
• Charging a contingent fee for amending a tax return when a member did not prepare the original return is:
• What kind of crime conviction must be reported to the Board of Accountancy?
• What Continuing Professional Education (CPE) requirements does Albers, a CPA, have to fulfill?
• What must an accountant confirm regarding their CPE compliance post-renewal?
• If a CPA discovers a conflict of interest due to a client relationship, what should they do?
• What is the effect on a CPA’s independence when a client threatens legal action for a small monetary amount due to late filing?
• What could happen if a member does not pay dues to the AICPA?
• If a partner in a firm is involved in an engagement while his father owns stock in the client, what is necessary to ensure independence?
• Does being named executor of an audit client's estate impair a CPA member's independence?
• What is true regarding Darrow, a CPA not belonging to AICPA or Cal CPA, and her adherence to AICPA pronouncements?
• In a case where a CPA's sister is president of a company that is a client of another office of the CPA firm, what is the impact on independence?
• What is required of a CPA when advertising their services?
• How is insider trading viewed in the context of CPA regulations?
• How often must a CPA complete ethics CPE requirements?
• Can the AICPA impose penalties greater than the initial offense for repeated violations?
• What should a member do if they find a material error in a prior year's income tax return during an audit?
• What must a CPA obtain prior to signing and filing a tax return for a client to maintain independence?
• What is the result of a guilty finding by a Trial Board?
• What indicates a member's voluntary compliance with the AICPA Code?
• Which rule states that a member cannot prepare a claim for a tax refund for a contingent fee?
• What is the impact on independence if a retired partner owns 1 percent of the stock in an audit client and is inactive for five years?
• If a CPA firm has knowingly prepared misleading financial statements for a second time, what is the maximum administrative penalty?
• What is the effect on independence if a CPA firm has unpaid fees from a client when issuing the current year’s financial statements?
• What must Keller, CPA, do after realizing she is short on CPE hours?
• If a CPA receives a commission for office supplies sold to a non-attest client, what is required for compliance with the Code of Professional Conduct?
• Under which rules is the AICPA Management Consulting Services Executive Committee authorized to promulgate standards?
• Which condition is NOT required for an accountant to maintain independence if they join a charitable organization's board that is an audit client?
• What must be true for an audit engagement to proceed when a member has relatives involved with the client?
• In what scenario is a commission prohibited for a CPA?
• In the case of a member who has a share in a country club where they are requested to perform an audit, how does their financial interest affect independence?
• What is one action a Trial Board cannot take after a hearing?
• What effect does an immaterial direct investment in a non-client company have on an auditor's independence?
• What is a reason for a CPA to be expelled from the AICPA?
• SEC independence rules apply to which type of companies?
• Which of the following describes the forms of practice that members are permitted to use?
• In the scenario where a partner's brother is on the board of directors of a client, how is the firm's independence affected?
• What determines if a CPA’s engagement may impair their independence?
• A member in practice is required to follow rules from:
• What must auditors do if adhering to GAAP would mislead the financial statements?
• When considering independence, what is the outcome if a CPA partner pays off a credit card fully every month?
• What must a CPA do to legally accept a commission?
• If a partner has a credit card from a bank while also auditing that bank, does this impact the firm's independence?
• If a CPA solicits a company that already has auditors, is this action considered ethical?
• Is it permissible for Brown, a CPA, to sell her list of clients to an outside adviser?
• Is it possible for a member to be tried and convicted for violating the Statements on Standards for Tax Services?
• If a member knows a client has acted outside tax laws, they:
• Does the position of a partner's wife as a cashier for a client impair the independence of the firm?
• What would likely happen to a firm accused of hiring discrimination by the AICPA Ethics Division?
• What is Joe's primary concern when seeking advice from Miller?
• Which group would be considered covered persons according to SEC definitions?
• What does California regulation 5061 state regarding acceptance of commissions?
• What is true regarding a joint business investment with a director of an audit client and independence?
• When do interpretations or ethics rulings usually become effective?
• A partner in an accounting firm has lent money to a client's officer. When must this loan be paid to maintain independence?
• Which of the following statements is true regarding commissions for CPAs in California?
• Which agency must approve the ethics rules promulgated by the PCAOB?
• If financial statements do not conform with generally accepted accounting principles, auditors may:
• If a retired partner works for one month reviewing tax returns, how does this affect her independence?
• If a partner in an accounting firm has an immaterial investment in a company with a material interest in an audit client, what is the effect on independence?
• What must occur to maintain independence when a CPA's relative holds a position with the audit client?
• Which of the following is NOT considered a general standard?
• Which group does the accounting profession's public include?
• Which of the following actions affects the independence of a CPA firm negatively?
• Can a public accounting firm accept a contingent fee from a publicly held audit client without impairing independence?
• Can a judge compel a member to disclose information about a client's affairs?
• If a member lacks sufficient competence to complete a job, what should they do?
• If a retiring CPA sells their practice based on a percentage of future fees, is that practice considered ethical?
• When a substantial error is found in a tax return, which option is NOT a preferred action for a CPA?
• Under what condition may a CPA accept a commission when providing services to a client?
• What impact does a threat of litigation from a client have on a CPA's independence?
• Who can a public accounting firm provide tax services to without impairing independence in an audit engagement?
• If a partner borrows funds from a bank that is an audit client, what is the effect on independence?
• The Principles state that a member has a responsibility to whom?
• What is the impact on independence if an auditor accepts both litigation consulting services and expert witness services for a client?
• Who ultimately has the final responsibility for positions taken in a tax return?
• What occurs to a CPA's independence if a retired partner of the firm accepts a directorship with an audit client?
• If a member's engagement with a client limits relevant data gathering, what action is the member allowed to take?
• In situations involving independence, which of the following factors is considered the most significant?
• What must occur for independence to be maintained when a CPA firm has a loan guarantee from an audit client?
• If an error is found in a previously prepared return, what is the appropriate action for the member?
• Is it allowed for a CPA to share fees for a referral to another professional?
• How soon after moving must Evans, CPA, notify the Board of her new address?
• If a CPA faces legal action due to a minor amount claimed by a client, under what condition is their independence unaffected?
• A sole practitioner wishes to invest in a corporation where their client owns 40% but the investment is not material to either party. Does this impact independence?
• What must a CPA practicing public accounting adhere to regardless of membership?
• What type of sanctions can the AICPA impose on a member?
• Which of the following groups is responsible for issuing interpretations of rules?
• What kind of advisor is Mr. Nasdaq described as in the scenario?
• How does serving on a client's board of directors affect an individual's independence?
• What is required for an auditor to maintain independence when providing consulting services?
• What is the consequence if a member states financial statements are in conformity with GAAP when they are not?
• Why might Miller not be able to accept commissions from Mr. Nasdaq?
• What is the consequence if a CPA audits an entity and also prepares payroll records for that entity?
• Can state associations discipline their members?
• What happens to the public knowledge of a censure imposed by the Trial Board?
• In a situation where a CPA partner buys into a tax shelter and later finds out that client executives are also invested, what is the impact on independence?
• May Green, CPA, accept a fee based on the outcome of a case as an expert witness?
• Is it ethical for a CPA to recommend selling a client account to another firm for a commission if the terms are disclosed to the client?
• What must a member justify if they depart from the interpretations of a rule?
• In what circumstance may a member withdraw from an engagement?
• Which requires that changes be approved by the members of the AICPA?
• If a partner’s capital contribution is returned upon retirement, how does this relate to independence with an audit client?
• What should a CPA do if a client insists on a position that the CPA does not agree with on a tax return?
• What should a CPA do if the tax position they are considering for a client contradicts prior court rulings?
• When is a CPA’s independence considered impaired due to stock ownership by a family member?
• In which scenario would an accounting firm's independence be impaired while conducting an audit?
• A CPA in public practice may choose to avoid operating under a code of professional ethics by not joining which entity?
• Is it permissible for a CPA firm to use a non-CPA broker to sell a client's account if the client is informed about the broker's fee?
• Under what circumstance can a CPA disclose confidential employer information?
• When a client files financial statements with the SEC, what restriction applies to outside auditors?
• In a situation where a CPA is owed payment for services but the client disputes the amount charged, what is the CPA entitled to do?
• What must CPAs avoid to maintain independence during an audit and consulting engagement?
• What aspects did Miller discuss with Joe regarding the distribution he received?
• What is a key compliance aspect for Miller when referring Joe to an investment adviser?
• How should a CPA handle client information received during the preparation of tax returns?
• When reasonable grounds exist for omitting an answer on a tax return, is an explanation required?
• What should a member do if they are convinced their opinion is compromised?
• Is Leung’s retirement annuity arrangement allowed under the California Accountancy Act?
• Are the Technical Standards from the Management Consulting Services Executive Committee enforceable under the Code of Professional Conduct?
• What should Fuller, CPA, do regarding the confidential information received from an attorney?
• If a member is suspended by the Trial Board, how does it affect their membership?
• What is required when a CPA provides non-attest services to an audit client under the AICPA Code?
• Which category contains the ethical standards, violation of which makes a member liable to disciplinary action?
• Under what conditions is independence not impaired for a CPA serving a publicly held company?
• Is it a violation of the Code of Professional Conduct for a CPA to enter into a joint venture with a bank for providing services?