AICPA FINAL EXAM – QUESTIONS & SOLUTIONS
What are the 10 steps in the ethical decision making model? Correct
Ans - Step One: Recognize the Ethical Issue
Step Two: Gather the Critical Facts
Step Three: Identify the Stakeholders
Step Four: Consider Alternatives
Step Five: Consider the Effect on Stakeholders
Step Six: Consider Your Comfort Level
Step Seven: Consider Rules, Regulations, and Laws
Step Eight: Make a Decision
Step Nine: Document your Efforts
Step Ten: Evaluate the Outcome
What does recognizing a potential ethical issue look like? Correct Ans -
What does considering your comfort level look like? Correct Ans -
Ask yourself "If I had to discuss your decision in public, would you be
concerned about it reflects on your ethics?"
What is the difference between the AICPA, SEC, PCAOB, and your state
board of public accountancy? Correct Ans - The AICPA is the
national professional organization for CPAs. AICPA provides resources and
information to members and coordinate activities with state CPA societies.
SEC empowered by congress to regulate financial reporting of PUBLICLY-
held companies. SEC establishes and enforces rules on accounting and
auditing (including auditor independence). PCAOB (created by SOX and
overseen by SEC) establish rules with respect to auditing and other
attestation engagements, quality control of audits, and independence of
public auditors. State Board issues CPA license and are frontline for
oversight on ethical behavior. Can create state ethics codes (can create
separate ones, or incorporate AICPA rules). Must follow state board rules
for state they are licensed in.
What is the new structure of the AICPA Ethics codification? Correct Ans
- Preface - overview, principles, and definitions)
Part 1 - rules related to those in public practice, conceptual framework on
independence and other rules on ethical conflicts
, Part 2 - Rules and interpretations applicable to members in business
(private practice)
Part 3 - Rules and interpretations applicable to all other members (retired,
between jobs, etc.)
What are the 4 sections of the AICPA Ethics codification? Correct Ans -
Pretty sure it's just this again (looked it up and this is what I got
everywhere I looked)
1. Preface - overview, principles, and definitions
2. Part 1 - Rules related to those in public practice, conceptual framework
on independence and other rules, guidance on ethical conflict resolution
3. Part 2 - Rules and interpretations applicable to members in business
(private practice)
4. Part 3 - Rules and interpretations applicable to all other members
(retired, between jobs, etc.)
What are the 6 pillars/principles of the code and what do each mean?
Correct Ans - (1) responsibilities - In carrying out your professional
responsibilities, you should exercise sensitive professional and moral
judgment
(2) serve the public interest - You should act in a way that will serve the
public interest, honor the public trust, and demonstrate your commitment
to professionalism
(3) integrity - To maintain and broaden public confidence, you should
perform all professional responsibilities with the highest sense of integrity
(being honest even when no one is looking or "above reproach").
(4) objectivity and independence - You should maintain objectivity and be
free from conflicts of interest in discharging your professional duties.
(5) due care and - You should observe the profession's technical and ethical
standards, strive continually to improve competence and the quality of
services, and discharge professional responsibility to the best of your
ability.
(6) scope and nature of services - As a member in public practice, you
should observe the principles of the AICPA Code in determining the scope
and nature of services to be performed
What are the 10 steps in the ethical decision making model? Correct
Ans - Step One: Recognize the Ethical Issue
Step Two: Gather the Critical Facts
Step Three: Identify the Stakeholders
Step Four: Consider Alternatives
Step Five: Consider the Effect on Stakeholders
Step Six: Consider Your Comfort Level
Step Seven: Consider Rules, Regulations, and Laws
Step Eight: Make a Decision
Step Nine: Document your Efforts
Step Ten: Evaluate the Outcome
What does recognizing a potential ethical issue look like? Correct Ans -
What does considering your comfort level look like? Correct Ans -
Ask yourself "If I had to discuss your decision in public, would you be
concerned about it reflects on your ethics?"
What is the difference between the AICPA, SEC, PCAOB, and your state
board of public accountancy? Correct Ans - The AICPA is the
national professional organization for CPAs. AICPA provides resources and
information to members and coordinate activities with state CPA societies.
SEC empowered by congress to regulate financial reporting of PUBLICLY-
held companies. SEC establishes and enforces rules on accounting and
auditing (including auditor independence). PCAOB (created by SOX and
overseen by SEC) establish rules with respect to auditing and other
attestation engagements, quality control of audits, and independence of
public auditors. State Board issues CPA license and are frontline for
oversight on ethical behavior. Can create state ethics codes (can create
separate ones, or incorporate AICPA rules). Must follow state board rules
for state they are licensed in.
What is the new structure of the AICPA Ethics codification? Correct Ans
- Preface - overview, principles, and definitions)
Part 1 - rules related to those in public practice, conceptual framework on
independence and other rules on ethical conflicts
, Part 2 - Rules and interpretations applicable to members in business
(private practice)
Part 3 - Rules and interpretations applicable to all other members (retired,
between jobs, etc.)
What are the 4 sections of the AICPA Ethics codification? Correct Ans -
Pretty sure it's just this again (looked it up and this is what I got
everywhere I looked)
1. Preface - overview, principles, and definitions
2. Part 1 - Rules related to those in public practice, conceptual framework
on independence and other rules, guidance on ethical conflict resolution
3. Part 2 - Rules and interpretations applicable to members in business
(private practice)
4. Part 3 - Rules and interpretations applicable to all other members
(retired, between jobs, etc.)
What are the 6 pillars/principles of the code and what do each mean?
Correct Ans - (1) responsibilities - In carrying out your professional
responsibilities, you should exercise sensitive professional and moral
judgment
(2) serve the public interest - You should act in a way that will serve the
public interest, honor the public trust, and demonstrate your commitment
to professionalism
(3) integrity - To maintain and broaden public confidence, you should
perform all professional responsibilities with the highest sense of integrity
(being honest even when no one is looking or "above reproach").
(4) objectivity and independence - You should maintain objectivity and be
free from conflicts of interest in discharging your professional duties.
(5) due care and - You should observe the profession's technical and ethical
standards, strive continually to improve competence and the quality of
services, and discharge professional responsibility to the best of your
ability.
(6) scope and nature of services - As a member in public practice, you
should observe the principles of the AICPA Code in determining the scope
and nature of services to be performed
