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AUD NINJA > Ethics & Professional Responsibilities > Flashcards

Ethics & Professional Responsibilities Flashcards

1
Q

Audit of Non-Issuers - Standard

A

Generally Accepted Auditing Standards (GAAS) issued by AIPCA

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2
Q

Audit of Non-Issuers - Code of Conduct

A

AICPA Code of Professional Conduct

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3
Q

Audit of Issuers - Standard

A

PCAOB Auditing Standards and GAAS

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4
Q

Audit of Issuers - Code of Conduct

A

AICPA Code of Professional Conduct
Securities Exchange Commission (SEC)
Sarbanes-Oxley Act (SOX)

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5
Q

International Audits - Standard

A

International Standards on Auditing (ISA)

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6
Q

International Audits - Code of Conduct

A

IESBA Code of Conduct

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7
Q

Governmental Audits - Standard

A

Generally Accepted Government Auditing Standards (GAGAS)

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8
Q

Governmental Audits - Code of Conduct

A

AICPA Code of Professional Conduct

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9
Q

Attestation Engagements - Standard

A

Statements on Standards for Attestation Engagements (SSAEs)

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10
Q

Attestation Engagements - Code of Conduct

A

AICPA Code of Professional Conduct

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11
Q

Accounting & Review Services - Standard

A

Statements on Standards for Accounting and Review Services (SSARs)

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12
Q

Accounting & Review Services - Code of Conduct

A

AICPA Code of Professional Conduct

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13
Q

Sets ethical standards for CPAs and provides a framework for resolving ethical dilemmas

A

AICPA Code of Professional Conduct

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14
Q

Designed to ensure that CPAs carry out their duties with professionalism, integrity, objectivity, and in the best interests of the public

A

AICPA Code of Professional Conduct

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15
Q

AICPA Code of Professional Conduct applies to which members?

A

Members in Public Practice
Members in Business
All Other Members

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16
Q

Integrity & Objectivity applies to which type of AICPA member?

A

Members in Public Practice
Members in Business
All Other Members

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17
Q

Independence applies to which type of AICPA member?

A

Members in Public Practice

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18
Q

General Standards applies to which type of AICPA member?

A

Members in Public Practice
Members in Business

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19
Q

Compliance with Standards Rule applies to which type of AICPA member?

A

Members in Public Practice
Members in Business

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20
Q

Accounting Principles Rule applies to which type of AICPA member?

A

Members in Public Practice
Members in Business

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21
Q

Confidentiality applies to which type of AICPA member?

A

Members in Public Practice

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22
Q

Contingent Fees applies to which type of AICPA member?

A

Members in Public Practice

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23
Q

Commission & Referral Fees applies to which type of AICPA member?

A

Members in Public Practic

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24
Q

Advertising & Other Solicitation applies to which type of AICPA member?

A

Members in Public Practice

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25
Q

Forms of Practices and Names applies to which type of AICPA member?

A

Members in Public Practice

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26
Q

Discreditable Acts applies to which type of AICPA member?

A

Members in Public Practice
Members in Business
All Other Members

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27
Q

Integrity & Objectivity implies…

A

Honesty
No conflict of interest
Free from bias
Impartiality
No misrepresentation of facts
Auditor’s judgment

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28
Q

Do Audits of Financial Statements of Issuers (PCAOB AS) require independence?

A

Yes

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29
Q

Do Audits of Financial Statements on Non-Issuers (GAAS) require independence?

A

Yes

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30
Q

Do Audits of Interim Financial Statements (PCAOB AS / GAAS) require independence?

A

Yes

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31
Q

Do Governmental Audits require independence?

A

Yes

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32
Q

Do Examination (SSAE) engagements require independence?

A

Yes

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33
Q

Do Review (SSAE) engagements require independence?

A

Yes

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34
Q

Do Agreed-Upon Procedures (SSAE) engagements require independence?

A

Yes

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35
Q

Do Review Services (SSARs) engagements require independence?

A

Yes

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36
Q

Do Consulting Services engagements require independence?

A

No

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37
Q

Do Tax Services engagements require independence?

A

No

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38
Q

Do Valuation Services engagements require independence?

A

No

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39
Q

Do Accounting Services engagements require independence?

A

No

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40
Q

Do Bookkeeping Services engagements require independence?

A

No

41
Q

Do Training Services engagements require independence?

A

No

42
Q

Do Preparation Engagement (SSARs) require independence?

A

No

43
Q

Do Compilation Engagement (SSARs) require independence?

A

No

44
Q

Audit Firm

A

Covered Member

45
Q

Audit Team

A

Covered Member

46
Q

All Partners of the Audit Firm Office / Members with an Influencing Position in the Firm

A

Covered Member

47
Q

Firm Members providing more than 10 hours of Non-Attest Services to a client

A

Covered Member

48
Q

Employee Benefit Plans of the Audit Firm

A

Covered Member

49
Q

Immediate family of Covered Members includes…

A

Spouse
Related Dependents
Unrelated Dependents

50
Q

Close relatives of Covered Members includes…

A

Parents
Sibling
Non-dependent child

51
Q

Duration of independence

A

Sustained from the date the engagement letter is signed until the professional relationship’s termination

52
Q

Threat where a member will not act with objectivity because the member’s interest are opposed to the client’s interests.

A

Adverse Independence Threat (Threat to Independence)

53
Q

Threat when a member promotes or supports a client’s interests or positions to such an extent that the member’s objectivity or independence is compromised.

A

Advocacy Threat (Threat to Independence)

54
Q

Threat when a member becomes overly sympathetic to the client’s interests of excessively accepting of the client’s work or products, which may jeopardize their objectivity.

A

Familiarity Threat (Threat to Independence)

55
Q

Threat when a member takes on the role of client management or assumes management responsibilities.

A

Management Participation Threat (Threat to Independence)

56
Q

Threat arises when a member (e.g. auditor) could benefit, either financially or in some other manner, from an interest in, or relationship with, a client or persons associated with the client.

A

Self-Interest Threat (Threat to Independence)

57
Q

Threat arises when a member is required to evaluate the results of a previous judgment made or service performed by them, or supervised by them.

A

Self-Review Threat (Threat to Independence)

58
Q

Threat arises when a member’s judgment is subordinated or compromised due to external pressures, coercion, or influences.

A

Undue Influence Threat (Threat to Independence)

59
Q

What are profession-based safeguards against threats to independence?

A

Code of Conduct
Continuing Professional Education
Legislation

60
Q

What are client-based safeguards against threats to independence?

A

Corporate governance structures
Internal audit function
Policies on hiring audit firm personnel

61
Q

What are audit firm based safeguards against threats to independence?

A

Quality control standards
Peer reviews
Rotation of audit partners
Policies to limit non-audit services to audit clients

62
Q

What is a direct financial relationship?

A

Owning stocks
General partnership in partnership interest

63
Q

What is an indirect financial relationship?

A

Shares in mutual funds
Limited partnership interest

64
Q

Does a material direct financial relationship by a covered member (except close relatives) impair independence?

A

Yes

65
Q

Does an immaterial direct financial relationship by a covered member (except close relatives) impair independence?

A

Yes

66
Q

Does a material direct financial relationship by a close relative impair independence?

A

Yes

67
Q

Does an immaterial direct financial relationship by a close relative impair independence?

A

No

68
Q

Does a material indirect financial relationship by a covered member (except close relatives) impair independence?

A

Yes

69
Q

Does an immaterial indirect financial relationship by a covered member (except close relatives) impair independence?

A

No

70
Q

Does a material indirect financial relationship by a close relative impair independence?

A

Yes

71
Q

Does an immaterial indirect financial relationship by a close relative impair independence?

A

No

72
Q

Is independence impaired when a member, their firm, or a close relative, have a loan or guarantee to/from an audit client?

A

Yes

73
Q

Do loans that are grandfathered impair independence?

A

No

74
Q

Do loans that are in accordance with market terms and conditions impair independence?

A

No

75
Q

Do loans that are fully collateralized impair independence?

A

No

76
Q

Does credit card debt with balances up to $10,000 per month impair independence?

A

No

77
Q

Do FDIC insured checking accounts impaired independence?

A

No

78
Q

Is independence impaired by gifts?

A

Depends on the value of the gift.

79
Q

What are the General Standards of the AICPA Code of Professional Conduct?

A

Professional competence
Due professional care
Planning and supervision
Sufficient relevant data
Third-party provider

80
Q

What are the exceptions to the Confidentiality rules?

A

Investigations and inquiries
Quality reviews
Subpoena or Court orders

81
Q

What type of Contingent Fees are allowed?

A

Fees fixed by courts
Representing in tax cases

82
Q

What services are not allowed to have Contingent fees?

A

Audit or Review
Attestation services
Review & Compilation
Preparing tax returns

83
Q

For what type of client are commission & referral fees allowed and not allowed?

A

Allowed - non-attest client
Not allowed - attest client

84
Q

What type of advertising is not allowed?

A

False
Misleading
Deceptive
Cannot claim a guaranteed refund

85
Q

What types of acts are considered discreditable to the profession?

A

Discrimination
Negligence in work
Withholding client records
Violation of confidentiality
Fraudulent marketing
Solicitation and disclosure of CPA exam questions

86
Q

What established the PCAOB?

A

Sarbanes-Oxley Act 2002

87
Q

Who must register with the PCAOB?

A

Auditors of issuers

88
Q

Which board is empowered to establish and adopt standards relating to auditing, attestation, quality control, ethics, and independence of auditors of public companies?

A

PCAOB

89
Q

According to the PCAOB, how long must audit working papers and related documentation be retained?

A

Seven years

90
Q

How often must firms auditing more than 100 issuers be inspected by the PCAOB?

A

Annually

91
Q

How often must firms auditing less than 100 issuers be inspected by the PCAOB?

A

Once every three years

92
Q

Are foreign accounting firms that audit U.S. public companies subject to the rules and regulations established by the PCAOB?

A

Yes

93
Q

According to the PCAOB, how often must the key audit personnel rotate on an audit?

A

Lead (primary) audit partner and the concurring (review) partner must rotate off the audit engagement every 5 years.

94
Q

Who oversees the PCAOB?

A

The SEC has oversight and enforcement authority over the PCAOB.

95
Q

Who has authority to issue sanctions?

A

SEC

96
Q

Who establishes specific requirements to ensure CPAs who audit Employee Benefit Plans are independent and free from any conflicts of interest?

A

Department of Labor (DOL)

97
Q

What agency is an independent, non-partisan agency that works for the U.S. congress?

A

Governmental accountability office (GAO)

98
Q

What is the primary function of the governmental accountability office (GAO)?

A

To audit federal agencies to ensure effective, efficient, and transparent use of public funds.

99
Q

Who investigates how the federal government spends taxpayer dollars?

A

Governmental accountability office (GAO)

AUD NINJA (14 decks)

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