1.
What is the meaning of the rule that requires the auditor be? independent?
1.
The auditor must be without bias with respect to the client under audit.
2.
The auditor must adopt a critical attitude during the audit.
3.
The? auditor's sole obligation is to
3.
. Which of the following services can be offered to public company audit clients under SEC requirements and the SarbanesdashOxley ?Act?
1.
Tax services for executives involved in financial reporting
2.
Internal audit outsourcing
3.
Tax planning not involv
3.
An auditor strives to achieve independence in appearance to
1.
comply with the auditing standards related to audit performance.
2.
become independent in fact.
3.
maintain public confidence in the profession.
4.
maintain an unbiased mental attitude.
1.
. In which one of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining the audit? fee?
1.
A fee based on whether the? CPA's report on the? client's financial statements results in the approval of a
1.
The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential client information obtained in the course of a professional engagement except with the consent of the client. In which one of the following situations would discl
3.
A? CPA's retention of client records as a means of enforcing payment of an overdue audit fee is an action that is
1.
not addressed by the AICPA Code of Professional Conduct.
2.
acceptable if sanctioned by the state laws.
3.
prohibited under the AICPA rule
3.
According to the? profession's ethical? standards, which of the following events may justify a departure from? GAAP?
I.
New legislation.
II.
Conflicting industry practices.
III.
Evolution of a new form of business transaction.
1.
I and II
2.
II and III
3.
3.
The concept of materiality would be least important to an auditor when considering the
1.
adequacy of disclosure of a? client's illegal act.
2.
discovery of weaknesses in a? client's internal control structure.
3.
effects of a direct financial interest in
2.
Which of the following is not a provision of the Sarbanes-Oxley Act of? 2002?
1.
The auditor of an issuer may not provide internal audit outsourcing services for the issuer.
2.
Audit documentation must be maintained for five years.
3.
The lead and reviewi
yes
Nonaudit services, violation?
Providing bookkeeping services to a public company. The services were preapproved by the audit committee of the company.
yes
Nonaudit services, violation?
.
Providing internal audit services to a public company audit client with the preapproval of the audit committee
no
Providing advice to a private company client on accounting for a merger with another private company.
no
Providing bookkeeping services to a private company. The source documents were prepared and authorized by the client.
no
Providing internal audit services to a public company that is not an audit client.
no
Implementing a financial information system designed by management for a private company.
no
Recommending a tax shelter to a client that is publicly held. The services were preapproved by the audit committee. ?(Assume the the service does not meet the characteristics of an abusive tax avoidance strategy and does not have the potential to impair?
independence, no
rule/violation
?Emrich, CPA, provides tax? services, management advisory? services, and bookkeeping services and also conducts audits for the same nonpublic client. Because the firm is? small, the same person often provides all the services.
independence and integrity and objectivity, yes
rule/violation:
Steve? Custer, CPA, set up a casualty and fire insurance agency to complement his auditing and tax services. He does not use his own name on anything pertaining to the insurance agency and has a highly competent? manager, Jack? Long, who r
confidential client information, yes
rule/violation:
Seven small Seattle CPA firms have become involved in an information project by taking part in an interfirm working paper review program. Under the? program, each firm designates two partners to review the audit? files, including the tax r
independence, no
rule/violation:
Franz Marteens is a? CPA, but not a? partner, with three years of professional experience with Roberts and? Batchelor, CPAs. He owns 25 shares of stock in an audit client of the? firm, but he does not take part in the audit of the? client,
general standards, yes
rule/violation:
A nonaudit client requests assistance of M.? Wilkenson, CPA, in the installation of a local area network. Wilkenson has no experience in this type of work and no knowledge of the? client's computer? system, so he obtains assistance from a
integrity and objectivity, yes
rule/violation:
In preparing the personal tax returns for a? client, Sarah? Milsaps, CPA, observed that the deductions for contributions and interest were unusually large. When she asked the client for backup information to support the? deductions, she wa
accounting principles, yes
rule/violation:
Roberta? Hernandez, CPA, serves as controller of a? U.S.-based company that has a significant portion of its operations in several South American countries. Certain government provisions in selected countries require the company to file fi
acts discreditable, no
rule/violation:
Archer? Ressner, CPA, stayed longer than he should have at the annual holiday party of Ressner and? Associates, CPAs. On his way home he drove through a red light and was stopped by a police? officer, who observed that he was intoxicated.