Ethical Considerations

Question 1

Unusual Circumstances

Answer 1

New Legislation

New Business Transaction

Question 2

Disclosure about clients that is prohibited

Answer 2

bankruptcy or anything that harms reputation of the client

Question 3

Misrepresentation

Answer 3

Material

Question 4

Solicitation rules

Answer 4

not prohibited

Question 5

Commission Prohibited when

Answer 5

1 - Report is used by third parties

2 - Compilations, Audits, Reviews

Question 6

Client
1- Work papers
2- Original Records

Answer 6

1 - never has to give client

2- must produce Orginals on client request; copies can be withheld

Question 7

member

Answer 7

member of the AICPA in public practice

Question 8

Member who owns and interest in the client and preforms a service who must comply with professional code of conduct

1 - member controls
2- member has not control

Answer 8

1 - member + affiliates

2 - member

Question 9

Referral Fees

Answer 9

permitted with disclosure

Question 10

Public companies permit auditors to provide which services

Answer 10

Tax planning

Question 11

Auditors involvement with IC

Answer 11

CANNOT
1 - Be responsible (monitor)
2 - implement
Exception: can create unless highly material

Question 12

Accounting Services must

Answer 12

be preapproved by the audit committee (detailed/explicit)

Question 13

PCAOB has the right to

Answer 13

Fine not prosecute

Question 14

Ethical Standards

Answer 14

Professional Behavior

Confidentiality

Question 15

Professional Standards

Answer 15

Public Interest

Objectivity/Independence

Question 16

Auditors limitations to auditing broker accounts

Answer 16

Any other assets ASIDE from cash or securities

Question 17

Auditors Rotation

Answer 17

5 years

Question 18

Auditors cannot provide individual tax services to

Answer 18

Oversight Position CEO/CFO/Chief

Excludes Chairman

Question 19

Assurance provides management

Answer 19

Decision Making info

Question 20

Consulting

Answer 20

Recommendations

Question 21

Statement of QC

Answer 21

1 - Tone @ top
2 - Relevant Ethical
3 - Acceptance/Continuance
4 - Human Resources
5 - Engagement Performance
6 - Monitoring

Question 22

Quality Control Element of
Assignment

Performance

Answer 22

HR based teams understanding and experience

Designation of senior to provide advice

Question 23

Compliance with professional standards is

Answer 23

Quality Control Aspect

Question 24

Management Assertions for year end

Answer 24

1 - completeness
2 - existenece
3 - valuation
4 - rights and obligation

Question 25

The auditor’s considerations in evaluating assumptions include whether they are consistent with

Answer 25

(1) economic conditions, (
2) management’s selection of the assumptions of market participants and resulting modifications of its own assumptions,
(3) the entity’s plans,
(4) past experience,
(5) prior-period assumptions, and
(6) many other factors.