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MODULE 21 PROFESSIONAL RESPONSIBILITIES MULTIPLE-CHOICE ANSWERS*

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4. 5. 6. 7. 8. 9.

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19. 20. 2I. 22. 23. 24.

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c c a d c b

10. a lI. 12. 13. 14. 15.

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26. 27. 28. 29.

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30. c

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48. d

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63. c

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49. 50. SI. 52. 53. 54.

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64. b 65. c 66. c

c c b d

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56. 57. 58. 59.

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60. a

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40. c

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4I. 42. 43. 44.

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45. c

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b c b d c d

55. d a a b c

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MULTIPLE-CHOICE ANSWER EXPLANATIONS

A.2. Code of Professional Conduct-Principles

statements. This is a key position as defined by the Interpretation of Rule 10 1.

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6. (a) According to Rule 102 of the Code of Professional Conduct, in performing any professional service, a member shall maintain objectivity and integrity, avoid conflicts of interest, and not knowingly misrepresent facts. Answer (a) is correct as. this would be knowingly misrepresenting the facts. Answers (b) and (d) are incorrect as these are not intentional misstatements. Answer (c) is incorrect because while one must remain objective" while performing consulting services, independence is not required unless the CP A also performs attest services for that client.

Cc) The requirement is to identify the statement that best describes the meaning of generally accepted auditing standards. Answer Cc) is correct because generally accepted auditing standards deal with measures of the quality of the performance of audit procedures CAU 150). Answer (d) is incorrect because procedures relate to acts to be performed, not directly to the standards. Answer (b) is incorrect because generally accepted auditing standards have been issued by predecessor groups, as well as by the Auditing Standards Board. Answer (a) is incorrect because there may or may not be universal compliance with the standards.

2. (d) All of these can result in the automatic expulsion of the member from the AICPA. Answer (a) is incorrect because although the conviction of a felony can result in automatic expulsion, likewise can the other two. Answers (b) and Cc) are incorrect because all three can result in automatic expulsion from the AICPA. A.3. Code of Professional Conduct-Rules, Interpretations, and Rulings 3. (b) Answer (b) is correct because an effective corporate governance structure is a control that can be implemented by a client that increases independence of the attest team. Answer (a) is incorrect because it is a safeguard that is implemented by regulation or the CP A firm. Answer Cc) is incorrect because it is a safeguard that is required by regulation or the CPA firm. Answer (d) is incorrect because it represents a threat rather than a safeguard. 4. (c) Answer (c) is correct because the team member would be reviewing his or her own work. Answer (a) is incorrect because this is an example of a familiarity threat. Answer (b) is incorrect because this is an example of a safeguard to threats to independence. Answer (d) is incorrect because this represents a financial self-interest threat to independence. 5. (c) According to the Code of Professional Conduct, Rule 101 regarding independence, a spouse may be employed by a client if s/he does not exert significant influence over the contents of the client's financial

* Explanation of how to use this performance record appears on page 12.

7. (d) The requirement is to determine which act is generally prohibited. Answer (d) is correct because "If an engagement is terminated prior to completion, the member is required to return only client records" (ET 501). Answer (a) is incorrect because issuing a modified report explaining a failure to follow a governmental regulatory agency's standards when conducting an attest service is not prohibited. Answer (c) is incorrect because accepting a contingent fee is , allowable when representing a elient in an examination by a revenue agent of the client's federal or state income tax return (ET 302). Answer (b) is incorrect because revealing confidential client information during a quality review of a professional practice by a team from the state CP A society is not prohibited (ET 301). 8. (c) According to Rule 203 of the Code of Profes- ' sional Conduct, CP As are allowed to depart from a GASB Statement only when results of the Standard would be misleading. Examples of possible circumstances justifying departure are new legislation and a new form of business transaction. 9. (b) The requirement is to determine whether aCPA may hire a non-CPA systems analyst and, if so, under what conditions. Answer (b) is correct because ET 291 allows such a situation when the CP A is qualified to supervise and evaluate the work of the specialist. Answer (a) is incorrect because the CP A need not be qualified to perform the specialist's tasks. Answer (c) is incorrect because non-CPA professionals are permitted to be associated with CP A firms

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