Applying ethical reasoning to identify shareholder interests and the effect of actions on shareholders is

inconsistent with which cognitive judgment trap? Rush to judgment

Which of the following should be avoided when accountants make professional judgment?
Bias, Conflict of Interest, undue influence

The conceptual frameworks in the AICPA Revised Code Incorporate a threats and safeguards
approach.

The independent auditor's public responsibility underlies its ______. (Check all that apply.)
fidelity to the public trust, certification of public reports, allegiance to creditors and shareholders

Circumstances that create doubts about the ability of a CPA to act with integrity, objectivity, or
professional skepticism are classified as threats to an auditor's independence

What is at the center of the KPMG Professional Judgment Framework? Mindset

An adverse interest threat occurs when a CPA adopts a position that is in opposition to the best
interests of the client

Which of the following are common cognitive traps that our judgment can incur? (Select all that apply.)
Judgment triggers, Groupthink, Problem solving rush

Ethical values as well as one's knowledge of the accounting issues in question influence the professional
judgment of accountants. (Enter one word per blank.)

Which of the following are sections in the AICPA Revised Code of Professional Conduct? (Select all that
apply.) Members in business, Members in public practice

The state of mind that permits the performance of an attest service without being influenced in ways that
compromise professional judgment is called ______. Independence in fact

Safeguards implemented by the attest client include ______. (Check all that apply.)
a commitment to fair financial reporting, an ethical tone at the top, an active audit committee

A self-review threat occurs when a CPA prepares source documents that are used to generate the
client's financial statements.

Which of the following nonattest service is prohibited for attest clients? Appraisal or valuation services

Which of the following may violate the Independence Rules? Close relatives of a CPA hold management
positions at the client

The potential danger of any family relationship with an audit client is may create the perception that
independence may be impaired and the family member may hold a key position with the client

Safeguards that might eliminate or reduce threats to independence include those ______. implemented
by the attest client, created by the profession, implemented by the firm, created by legislation

Threats to the independence of CPAs include ______. financial self-interest threat, familiarity threat,
advocacy threat, self-review threat

A situation may cause the SEC to determine that auditor independence is impaired when the situation
______.
  creates a mutual or conflicting interest between the CPA and the audit client
 places the accountant in the position of auditing his own work, results in the accountant acting as
management or an employee of the audit client
 places the accountant in a position of being an advocate for the client

True or false: SOX prohibits bookkeeping services for audit clients. True

Amendments to Rule 2-01 of Regulation SX would modernize the rules and focus on relationships that
may pose threats to an auditor's: Objectivity and impartiality

True or false: Independence rules may extend to certain family members of the CPA. True

Resolution of ethical conflict may call for consulting with all of the following individuals except: the media

The independence rules apply to close relatives of the CPA who

 own a financial interest in the client that is material to their net worth and is known by the
CPA
 hold a key position with the client that enables them to exercise significant influence over
the client.

Which of the following are included in the conceptual framework for CPAs in business? Integrity and
Objectivity

If an accountant, with respect to an audit client, is able to exercise objective and impartial judgment on all
issues relative to the engagement, the SEC deems the accountant to be independent

A self-interest threat exists for a CPA in business when the CPA could benefit from a relationship with
the employing organization

In October, 2020, the SEC recommended amendments to Rule 2-01 of Regulation SX to lessen threats
to an auditor's objectivity and increase investor protection

How individuals should bring their concerns to superiors within the organization and how possible
objections can effectively be counteracted are addressed by the Giving Voice to Values methodology.

When a CPA assesses whether an ethical conflict exists, they should assess relevant facts and
applicable laws

The AICPA Revised Code of conduct includes material for CPAs in business to evaluate the relationship
between the CPA and their employer and any potential threats to the Integrity and Objectivity Rule.

If a CPA in professional practice employs the services of a third-party provider, the CPA is responsible
for verifying that the third party meets competence standards.

When a CPA makes a whistleblowing charge against the employer under Sarbanes-Oxley or Dodd-Frank,
a(n) adverse interest threat arises.

The Giving Voice to Values methodology relates to the conceptual framework for CPAs in business with
the goal of convincing others of the most ethical action

CPAs may be exposed to disciplinary action when engaged in which of the following acts discreditable?
 Failure to follow all relevant rules and regulations pertaining to government audits
 Failure to file personal tax returns or pay tax liability
 Negligence in the preparation of financial statements or records
The rule that may hold CPAs accountable for personal and professional actions is the Acts Discreditable
Rule.

Under the competence standards for CPAs in professional practice, when a CPA prepares financial
statements for an organization that he is a shareholder of, the CPA has a responsibility to disclose the
relationship.

A CPA is prohibited from receiving a contingent fee from a client when also performing which of the
following? (Check all that apply.)
 An examination of prospective financial information
 A compilation of financial statements when there is third-party reliance
 the lack of independence is not disclosed, An audit or review of financial statements

When a CPA subordinates his judgment to another individual of the employing organization due to that
individual's reputation with the company, an undue influence threat exists.

How individuals should bring their concerns to superiors within the organization and how possible
objections can effectively be counteracted are addressed by the Giving Voice to Values methodology.

Unlike the acceptance of a contingent fee, a CPA who receives a commission or referral fee must
disclose permitted commissions and referral fees to any party to whom the recommendation is
made.

Failure of a CPA firm to file and pay income taxes is considered a(n) Discreditable Act.

Member (CPA)-prepared records include adjusting, closing, combining, or consolidated journal

entries

Advertising and solicitation practices raise ethical issues for CPAs that were not present years ago
because the
 new forms of advertising create challenges for regulators
 information is more readily available

The acceptance of a contingent fee for professional services when also preparing attest-related services
for a client is prohibited because it is a violation of independence

A CPA can disclose confidential client information when the client specifically consents.

The difference between receipt of a contingent fee and a commission or referral fee is that ______.
 a commission is typically paid to the CPA for recommending a product of another party to
the client
 A contingent fee is conditioned on the outcome of the service
 a referral fee is typically paid to the CPA by the client for referring a service of the client to
another party

Changes in the form of professional accounting organizations and the name rule in recent years include
which of the following? (Check all that apply.)
 CPAs can practice in alternative practice structures.
 CPAs only need to own a majority of the equity interests in the firm.

CPAs are prohibited from advertising and soliciting potential clients when ______.
 the statements imply the ability to influence a court or regulatory agency
 the statements create false or unjustified expectations of favorable results
The General Standards Rule calls for ______. (Select all that apply.)
 competence
 due care

Rule 1.700.001 provides that a CPA can divulge confidential client information without violating the rule in
order to ______. (Check all that apply.)
 adhere to applicable laws and regulations
 enable an inspection of the CPA's professional practice by the PCAOB
 respond to a validly issued subpoena or summons
 support the CPA's defense in a disciplinary investigation

Which of the following professional standards must tax accountants adhere to when providing
professional services? (Check all that apply.)
 Contingent Fees Rule
 SSTS
 Confidentiality Rule

The elements of a tax return position include which of the following? (Check all that apply.)
 Reflected on a tax return on which the CPA has specifically advised a taxpayer
 Position about which a CPA has knowledge of all material facts

The good-faith belief standard for tax positions requires that it have at least a(n) realistic possibility of
success if challenged in an administrative or judicial proceeding on its merits.

Circular 230 forbids tax practitioners from having conflicts of interest, however, a waiver may be obtained
for (select all that apply):
 the representation is not prohibited by law
 the tax practitioner reasonably believes that they can still competently and diligently
represent each client

The spirit of the rules suggests the essence of professionalism is ______. (Select all that apply.)
 follow the letter of the rule
 follow the spirit of the rule
 protect the public interest

PCAOB Rule 3520 covering Auditor Independence requires auditors to maintain independence
throughout the audit and professional engagement period

Which of the following relate to the professional standards of a tax accountant?

 Act honestly
 Act as an advocate for his/her client
 Exercise due care
Prior to concluding whether a tax position is appropriate, the CPA should become knowledgeable of all
the material facts related to the position.

The independence restrictions under PCAOB Rule 3521 mirrors those of the AICPA Code of Professional
Conduct.

In tax planning matters, a CPA may still recommend a tax position that does not meet the realistic
possibility of success standard if ______.
 a reasonable basis exists for the position
 the CPA recommends appropriate disclosure
Under Rule 3522 Tax Transactions, an aggressive tax position exists when a significant purpose of the
transaction is tax avoidance.

Circular 230, Regulations Governing Practice Before the Internal Revenue Service, requires tax
practitioners to advise the client promptly of any noncompliance, error, or omission and its
consequences

Rule 3523 treats a registered public accounting firm as not independent if the firm provides tax services
to members of management who serve in financial reporting oversight roles

Which rule requires the accounting firm to be independent of the client throughout the professional
engagement period? Rule 3520 Auditor Independence

Prior to performing any permissible tax service for an audit client, Rule 3524 requires the registered public
accounting firm to seek preapproval from the audit committee.

Under Rule 3521 Contingent Fees, independence is considered to be impaired when a registered public
accounting firm performs an audit and ______. (Check all that apply.)
 receives from the client a contingent fee or commission
 provides any service or product to the client for a commission
 provides any service or product to the client for a contingent fee

Which rule applies when a registered public accounting firm is not independent of the client when an
aggressive tax position exists? Rule 3522 Tax Transactions

When a CPA firm requests audit committee preapproval of nonauditing services related to internal control
over financial reporting, the auditor should provide written documentation of the scope of the
service

Rule 3523 treats a registered public accounting firm as not independent if the firm provides tax services to
members of management who serve in financial reporting oversight roles unless the person is in that
role only because she serves as a member of the board of directors

Discussions with the audit committee undertaken by the audit firm are designed to ensure auditor
independence.

Under Rule 3524, which of the following requirements exist for a firm that seeks audit committee
preapproval to perform permissible tax services for the audit client?
 Describe in writing the scope of the services and fee structure for the engagement.
 Discuss with the audit committee the potential effects of the services on audit
independence.
 Document the substance of the discussions with the audit committee.

The PCAOB conducts mandatory quality inspections of audits of publicly registered accounting firms. The
purpose of the inspections is to: identify deficiencies in audits

An annual requirement under Rule 3526 is for the CPA firm to affirm to the audit committee all
relationships with persons in financial reporting oversight roles are reasonably thought to bear on
independence

For 2019, the PCAOB completed mandatory quality inspections and identified a deficiency rate of 30% for
PwC: