Ethics Final AICPA Latest Update -

Ethics Final – AICPA Latest Update - Actual Exam 120 Questions with 100% Verified Correct Answers Guaranteed A+ Verified by Professor

A compilation report can be issued on the financial statements of a public company. -

CORRECT ANSWER: False, A compilation report cannot be issued on the financial

statements of a public company. Therefore,in this situation, the accountant is required to disclaim an opinion and state that the firm is not independent

A conflict of interest does exist when a member in public practice advises a client on the

purchase of a product or service. - CORRECT ANSWER: False, Only if the member

receives a royalty or commission agreement with one of the potential vendors of that product or service.

A conflict of interest does exist when a member in public practice advises a client to invest in a business in which the member's cousin has a financial interest in the

business. - CORRECT ANSWER: False, Advising a client to invest in a business in

which, for example, the immediate family member of the member has a financial interest in the business would be a conflict of interest but a cousin is not considered an immediate family member.

A conflict of interest does not exist when a member in public practice provides taxes

services to a divorced couple - CORRECT ANSWER: False, The conflict of interest

exists if the couple were involved in a divorce proceeding

A conflict of interest does not exist when a member in public practice refers a client to a service bureau in which the member or partners in the member's firm hold material financial interest. - CORRECT ANSWER: False, This creates an adverse interest and a self-interest which creates a treat to the member's compliance with the Integrity and Objectivity Rule.

• / 3

A conflict of interest exists if a member in public practice provides services to a company that is a major competitor of a company in which the CPA has a position of

influence. - CORRECT ANSWER: True

A conflict of interest would exist if a member in business selects his ex-wife's company to provide cleaning services for his employer's buildings. - CORRECT ANSWER: False, Ex-wife is not considered to be an immediate family member.

A covered member participates in his wife's health and welfare plan and audits such

plan. Independence is impaired. - CORRECT ANSWER: False, Independence would

not be considered impaired if the plan is normally offered to all employees of equivalent employment position.

A covered member's/person's direct financial interest in a client does not impair

independence. - CORRECT ANSWER: False,

A direct financial interest in a client does impair independence.

A CPA firm being sued by a client alleging deficiencies in the CPA's audit work would

impair the firm's independence. - CORRECT ANSWER: True

Independence is impaired when litigation between client and member is begun by the client alleging deficiencies in their audit work.

A CPA firm being sued by a client alleging they were overcharged by $100 for tax advice

would impair the firm's independence. - CORRECT ANSWER: False

Independence would not be impaired when the litigation is not related to the audit and the amount is not material.

A CPA firm suing a client for withholding information during an audit would impair their

independence - CORRECT ANSWER: True

• / 3

A firm can inform personnel of independence requirements through training, and of prohibited investments, through maintaining and communicating a list of clients that

require maintenance of independence - CORRECT ANSWER: True

A grandfathered loan is a loan obtained from a nonclient financial institution that was

later sold to a client. - CORRECT ANSWER: True

A member can retain client records until the client pays for services performed. -

CORRECT ANSWER: False

This is considered a discreditable act.

A member in business who is a broker-dealer attending a trade convention in Las Vegas would not be violating the Integrity and Objectivity Rule if he accepted tickets from one

of the vendor to attend a Las Vegas show. - CORRECT ANSWER: False, The

entertainment is associated with active conduct of business directly before, during or after the entertainment.

A member in business would not be in violation of the Integrity and Objectivity Rule if they were directed by their supervisor to record misleading entries in an entity's financial records but at the time did not know the entries were misleading. - CORRECT ANSWER: True, A member has to know that the entries were misleading at the time.

A member in public practice cannot receive a commission or referral fee on investments

recommended to a tax client. - CORRECT ANSWER: False

Tax is not considered a disqualifying service

A member in public practice is prohibited from accepting a contingent fee that is fixed by

courts and other public authorities. - CORRECT ANSWER: False

Solely for the purposes of the Contingent Fees Rule, fees are not regarded as being contingent if fixed by courts or other public authorities.

• / 3