MULTIPLE CHOICE QUESTIONS FROM CPA EXAMINATIONS
4-18 (OBJECTIVES 4-5, 4-6) The following questions concern auditor independence. Choose
the best response.
a. What is the meaning of the rule that requires the auditor be independent?
(1) The auditor must adopt a critical attitude during the audit.
(2) The auditor’s sole obligation is to third parties.
(3) The auditor may have a direct ownership interest in the client’s business if it is not
material.
(4) The auditor must be without bias with respect to the client under audit.
b. Which of the following services can be offered to public company audit clients under
SEC requirements and the Sarbanes–Oxley Act?
(1) Tax services for executives involved in financial reporting
(2) Tax planning not involving tax shelters
(3) Internal audit outsourcing
(4) Bookkeeping and other accounting services
c. An auditor strives to achieve independence in appearance to
(1) comply with auditing standards related to audit performance.
(2) become independent in fact.
(3) maintain public confidence in the profession.
(4) maintain an unbiased mental attitude.
4-19 (OBJECTIVE 4-7) The following questions concern possible violations of the AICPA Code
of Professional Conduct. Choose the best response.
a. 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 re-
sults in the approval of a bank loan.
(2) A fee based on the outcome of a bankruptcy proceeding.
(3) A fee based on the nature of the service rendered and the CPA’s expertise instead
of the actual time spent on the engagement.
(4) A fee based on the fee charged by the prior auditor.
b. 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 disclosure by a CPA be in violation of the Code?
(1) Disclosing confidential information in compliance with a subpoena issued by a
court.
(2) Disclosing confidential information in order to properly discharge the CPA’s responsibilities in accordance with the profession’s standards.
PROFESSIONAL ETHICS
(3) Disclosing confidential information to another accountant interested in purchasing the CPA’s practice.
(4) Disclosing confidential information during an AICPA-authorized peer review.
c. 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 rules of conduct.
(4) a violation of generally accepted auditing standards
