CPA Australia Ethics and Governance M1(Knowledge Equity Questions - CONSOLIDATED)
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CPA Australia
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CPA Australia
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Module 1: Accounting and Society (KE Questions) Mini Quiz (M1 Part A KE)
1. According to Greenwood 1957, how many attributes does a
Are medical doctors considered to be professionals? Use the profession have?
eight attributes of a profession to evaluate how to classify
medical doctors. (M1 Part A KE) A. 5
1. Systematic body of theory and knowledge B. 6
● This refers to the standards that prescribe C. 7
knowledge, skills and competence required by D. 8
the profession.
● For example, in the medical profession, the Answer:
Australian Medical Council develops standards C. 8
for medical education and training in all phases C is correct because Greenwood 1957 identifies eight attributes
of medical education that when considered together would usually indicate the
2. Extensive education process for its members existence of a profession.
● This refers to the understanding of theory and
practice of the profession of knowledge and Module: 1 > Part: A > 1.4 What is a profession? > Page: 8
skills that are not generally obtained or
understood by the general public 2. Lawyers often wear long black cloaks which distinguishes
● For qualifying in the medical profession, a them as legal professionals.’
doctor is required to complete specialist medical
training and continued professional Which attribute of the profession does this relate to?
development programmes.
● This indicates an extensive education process A. A code of ethics.
3. Ideal of service to the community B. A unique culture.
● Doctors are often seen providing medical and A. A body of knowledge.
healthcare to society in many instances. B. An education process.
● For example, doctors often provide pro bono
work or free services to communities in need Answer:
such as after an earthquake disaster B. A unique culture.
4. High degree of autonomy and independence B is correct because the use of long black cloaks is a norm for
● A high degree of autonomy and independence lawyers and is a characteristic that distinguishes them from other
exists in the medical profession since the professionals. Therefore, it is a distinct and unique culture.
Medical Board of Australia regulates Australia’s Module: 1 > Part: A > 1.4 What is a profession? > Page: 8
medical practitioners
5. Code of ethics for its members 3. Which of the following is not one of the perspectives of a
● The board also develops codes and guidelines service ideal?
to guide the profession
6. Distinctive ethos or culture A. Community service.
● Doctors have distinct ethos and culture in terms B. The well-being of society.
of the technical worlds and jargon they use, C. The pursuit of excellence.
often the clothes they wear, traditionally white D. The quest for public satisfaction.
coats and stethoscopes as well as the distinct
title of Doctor in front of their names Answer:
7. Application of professional judgment D. The quest for public satisfaction.
● Doctors apply professional judgment for every D is correct because the three perspectives of a service ideal
patient they see in terms of identifying include:
symptoms an judging the cause of problems - the well-being of society
based on the symptoms - the pursuit of excellence
● Further, the decision of how to best treat the - community service.
problem requires the application of professional
judgment, especially when the patient is using Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 13
other medication or has other complications
8. Existence of a governing body 4. Which one of the following statements does not correctly
● The medical board of Australia serves as a describe a profession?
governing body for doctors
● Doctors need to register with the medical board A. Professions exist mainly to serve society.
in order to practice and will be subject to B. Professions are strictly regulated by external bodies.
investigations by the medical board if there are C. Professions have a substantial degree of independence
complaints lodged against them and autonomy.
D. Professions are given permission to provide services to
The existence of all these attributes leads to the conclusion that the public through some regulatory process.
this occupation is a profession
Answer:
B. Professions are strictly regulated by external bodies.
B is correct as this statement is not correct.
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While some professions may be strictly regulated by external 7. Which body is responsible for setting accounting
bodies, this is not the case with all professions. The accounting standards in Australia?
profession is not strictly regulated by an external body, since this A. FRC
would place undue constraints upon the exercise of professional B. CPA
judgment. However, the profession has moved from self- C. AASB
regulation to co-regulation with external bodies. D. AUASB
Options A, C and D: all describe attributes of a profession. Answer:
Professions serve society, provide a service through a regulatory C. AASB
process, and have a substantial degree of independence and C is correct because the AASB is the Australian Accounting
autonomy. Standards Board and this is the body that is responsible for setting
Module: 1 > Part: A > 1.5 What is a professional? > Page: 10 accounting standards in Australia.
Also see: Module 1 > Section 1.4 What is a profession?
A is incorrect because the FRC is the overarching Government
5. Which of the following words is the foundation of the CPA regulatory body that oversees the AASB and the AUASB but it
Australia ethos? does not specifically set accounting standards.
A. Objectivity B is incorrect because CPA is a professional accounting body and
B. Independence it does not set accounting standards.
C. Public service
D. Integrity D is incorrect because the AUASB is the body that is responsible
for setting auditing standards in Australia
Answer:
D. Integrity Module: 1 > Part: A > 1.9 The profession's regulatory process >
D is correct (page 16). While objectivity, independence and public Page: 19
service are all important, the ethos (as shown in the logo) is based
on Integrity. 8. Which of the following relating to the regulation of the
Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 16 accounting profession is correct?
6. Which of the following is not a way that accounting meets A. The accounting profession regulates itself.
the traditional attributes of a profession? B. The profession is co-regulated with the government.
A. Achieving in all circumstances the best outcome for the C. The public is integral in the regulation of accountants.
client D. The standard setting boards are responsible for
B. Establishing specialist skills and experience supported by regulating the profession.
a well-founded body of knowledge
C. Using professional judgment to diagnose and solve Answer:
complex, unstructured values-based problems B. The profession is co-regulated with the government.
D. Upholding a service ideal in which the reliable quantifying B is correct because the accounting profession is no longer self-
and reporting the basic facts of economic life serves the regulated. It is now co-regulated with the Australian government.
public interest The government body that co-regulates the accounting profession
is the Australian Financial Reporting Council (FRC).
Answer:
A. Achieving in all circumstances the best outcome for the Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 14-15
client
A is the correct answer because this statement is not valid. 9. Which of the following is not a professional accounting
Accounting does not pursue the best outcomes for the client in all body in Australia?
circumstances, as this might not be in accordance with regulation
or law, or the public interest. A. Institute of Public Accountants.
B. Certified Practicing Accountants Australia.
Options B, C and D are all accurate statements so these are not C. Chartered Accountants Australia and New Zealand.
correct because accounting involves specialist skills, a service D. Association of Chartered Certified Accountants.
ideal and judgment.
Answer:
Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 12 D. Association of Chartered Certified Accountants.
D is correct because the three professional accounting bodies in
Australia include the: Institute of Public Accountants; Certified
Practicing Accountants Australia; and Chartered Accountants
Australia and New Zealand
Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 14
10. In 2019 a CPA member had their membership forfeited
and they are not eligible for readmission for a period of 20
, 3
years, and also received a fine of $30,000, along with costs of regulatory requirements. The firm is to make certain that all
$2.450.04. This was the result of being the subject of an staff comply with the above.
adverse finding that was not overturned by a statutory body
on 12 March 2019. Which standard governs this?
Which of the following was the member in breach of?
A. APES 110
A. Part 5 of the By-Laws of CPA Australia B. APES 205
B. Clause 39 of the Constitution of CPA Australia Ltd C. APES 210
C. The One-Person Tribunal D. APES 320
D. The Disciplinary Tribunal
Answer:
Answer: D. APES 320
B. Clause 39 of the Constitution of CPA Australia Ltd D is correct (page 19) Apes 320 was issued by APESB in 2006
B is correct (page 21). Clause or article 39 of the Constitution sets entitled Quality Control for Firms. It focuses on basic principles
out professional conduct and the ability to impose penalties if a and guidance for firms in relation to setting up a system of quality
person does particular things including gaining false admission to control.
CPA Australia, becoming insolvent or acting dishonestly in any
civil proceedings. Module: 1 > Part: A > 1.9 The profession's regulatory process >
Page: 19
The By-Laws outline the process by which complaints are made
and resolved. The One-Person Tribunal and Disciplinary Tribunal 13. Which of the following is not a component that is required
are where the hearing is held. for the application of professional judgment?
Module: 1 > Part: A > 1.9 The profession's regulatory process > A. Ability to use knowledge.
Professional Discipline > Page: 21 B. Ability to diagnose issues.
C. Ability to solve problems.
11. The accounting profession has a certain level of ability to D. Ability to follow instructions.
self-regulate (which is shared with government). One area of
self-regulation is the regulation of accounting firms who Answer:
make sure they have effective quality control, including D. Ability to follow instructions.
appropriate policies and procedures. D is correct because Becker (1982) indicates that professional
judgment is ‘the ability to diagnose and solve complex,
Which standard governs this area? unstructured values-based problems of the kind that arise in
professional practice.’
A. APES 110
B. APES 210 The application of knowledge and skills is an underlying criteria
C. APES 320 required for each of these components of professional judgment.
D. APESB
Therefore, the ability to follow instructions is not a component of
Answer: professional judgment. This does not require the application of
C. APES 320 knowledge to solve unstructured value based issues.
C is correct (page 19). APES 320 is called Quality Control for firms
and helps ensure that an accounting firm complies with Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 16
professional and regulatory requirements.
14. Sam is not feeling well and he visits a doctor.
APES 110 is the code of ethics, and APES 210 focuses on
conformity with auditing and assurance standards. What component of professional judgment would be required
for the doctor to identify Sam’s sickness?
Module: 1 > Part: A > 1.9 The profession's regulatory process >
Page: 19 A. Ability to solve.
B. Ability to research.
C. Ability to diagnose.
D. Ability to communicate.
Answer:
C. Ability to diagnose.
C is correct because the ability to diagnose would enable the
doctor to identify symptoms and come up with the specific
sickness that is afflicting Sam.
Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 16
15. Which of the following is most likely to require the
12. All accounting firms in public practice are required to application of professional judgment?
establish a system of quality control focusing on areas of
policy and procedures that adhere to professional and A. Marking a multiple choice exam.
, 4
B. The application of accounting standards. C. Management accounting
C. The calculation of a mathematical formula. D. Financial planning
D. Working out the GST from a shopping receipt.
Answer:
Answer: A. Tax planning
B. The application of accounting standards. A is correct (page 27). 84% of SMP (small-to-medium practice)
B is correct because the application of accounting standards respondents to the IFAC survey provided business or consulting
require understanding and interpretation and may be difficult in services to small business clients, with the most common being:
different situations and for different clients. The standards cannot
be applied without the accountant diagnosing and solving · 52% tax planning;
problems while applying knowledge and skills. The application of · 45% corporate advisory services;
accounting standards can be subjective in certain circumstances. · 41% management accounting (Note that financial planning
was not mentioned in the survey).
The other options are straight forward and can be calculated or
worked out in an objective manner. Thus, they do not necessarily Module: 1 > Part: B > 1.10 Accounting roles, activities and
require the application of professional judgment. relationships > Page: 27
Module: 1 > Part: A > 1.8 Attributes of a profession > Page: 16 18. Which one of the following best describes professional
judgment?
16. When laws were put in place that made acting in the best
interest of the client a requirement some accountants and A. The acquisition of knowledge through a formal
financial planners argued and lobbied against these laws. educational process
B. The ability to diagnose and solve complex, unstructured
Which view of the profession appears most relevant here? ‘values-based’ problems
C. Practical experience that ensures the accounting role can
A. Market control view be completed in a professional manner
B. Traditional view D. Problem solving and the ability to apply the right technical
C. Enlightened self-interest view solution despite pressure or social ideals
D. Monopoly view
Answer:
Answer: B. The ability to diagnose and solve complex, unstructured
B. Market control view ‘values-based’ problems
A is correct (page 11). The market control view suggests that B is correct as this description of professional judgment is
accountants are self-interested and less concerned with the provided in the materials and attributed to Becker (1982).
broader public interest than their own careers. Actions where you
do not act in the best interest of the client often occur when A is incorrect. Becker (1982) states that acquisition of knowledge
financial planners or accountants receive commissions for is important but not enough to identify a person as a professional,
recommending particular products. who also needs to be able to diagnose and solve complex
problems.
The temptation to recommend a financial product that is not
suitable is high if you will receive a large amount of money as a C is incorrect. Practical experience is identified as being important
bonus - great for the accountant, but not great for the client. in both professional and non-professional environments, so this is
not seen as a distinguishing characteristic.
Module: 1 > Part: A > 1.7 Trust and professions > Page: 11
D is incorrect. Problem solving is important, but professional
judgment is more than applying technical solutions, and involves
being able to identify value conflict in relation to complex social
values that can regularly apply to decisions. Professionals are
expected to choose the outcome that best meets the social ideal.
Module: 1 > Part: A > 1.8 Attributes of a profession > Application
of professional judgment > Page: 16
17. Which of the following was found by IFAC (2016) to be the 19. John and his supervisor Elizabeth work as auditors for a
greatest area of business or consulting services provided by hedge fund. When they finalize their annual audit the
accountants to SMPs? valuation of the company is far higher than John expected,
and he suspects Elizabeth has inflated the valuation to please
A. Tax planning management and ensure their bonuses.
B. Corporate advisory services
, 5
What should John do? III Professionals have a significant level of training and
competence.
A. Confront Elizabeth regarding his suspicions.
B. Nothing, his responsibility is to the company. IV Professionals apply their skill and judgment in areas of
importance.
C. Report his suspicions to the hedge fund’s senior
management.
A. I and II only
D. Report his suspicion to the General Manager
B. II and III only
Professional Conduct (GMPC) of CPA.
C. I, III and IV only
D. II, III and IV only
Answer:
A. Confront Elizabeth regarding his suspicions.
Answer:
A is correct. As specified in the module, ‘The complainant should
D. II, III and IV only
first attempt to resolve the matter directly with the CPA Australia
D is correct as a professional is defined as ‘a person who has a
member’ — in this case Elizabeth.
significant level of training and a high level of competence and
skills in an area, behaves in an ethical and appropriate manner
B is incorrect as a CPA’s primary duty is to the public, not to their
and applies their skill and judgment in areas of importance.’
employer, as specified in the module: Accounting information is
relied on heavily by people who make significant decisions about
Therefore, statements II, III and IV are correct.
the allocation of resources. Accountants, therefore, serve the
public interest by creating and distributing information that
22. Which of the following is not one of ‘the four Es’ that form
conveys a clear and accurate picture of an entity’s financial
the ideals of the accounting profession as identified by
performance, financial position and other relevant issues.
Carnegie and Napier (2010)?
The public duty of CPAs is further discussed in module 2.
A. Expertise
B. Education
C is incorrect, because John should attempt to resolve the matter
C. Enlightenment
with Elizabeth first as discussed under Option A. Furthermore,
D. Entrepreneurship
John suspects managerial influence may be responsible in part for
the inflated evaluation. The auditor’s independence should be
Answer:
maintained.
C. Enlightenment
C is the correct answer because enlightenment is not one of ‘the
D is incorrect. While John’s duty is to report Elizabeth’s behaviour
four Es’ identified.
to the MPC of CPA, this is only after the initial required attempt to
resolve the matter with Elizabeth himself. If her response is not
Carnegie and Napier (2010) identified the ideals of accounting
satisfactory he ‘must lodge a written complaint providing all
professionalism as comprising ‘the four Es’ of education, ethics,
necessary details, supported by documentary evidence’.
expertise and entrepreneurship.
Module: 1 > Part: A > 1.9 The profession's regulatory process >
23. Which one of the following is not a perspective of a
Page: 21
service ideal?
A. Pro bono work
20. Which of the following is not an attribute of a profession?
B. Community service
C. The well-being of society
A. Extensive education process
D. The pursuit of excellence
B. Existence of a governing body
C. Application of professional skepticism
Answer:
D. Systematic body of theory and knowledge
A. Pro bono work
A is the correct answer because pro bono work is not a
Answer:
perspective identified. It falls under the perspective of ‘Community
C. Application of professional skepticism
service’ but is not a stand-alone perspective.
C is the correct answer because the application of professional
skepticism is not an attribute of the profession. This option closely
resembles ‘the application of professional judgment’ which is an
attribute of the profession. Professional skepticism and
professional judgment are very different concepts.
A, B and D are all attributes of the profession.
24. Which of the following is not part of the self-regulatory
21. Which of the following best describes the ‘traditional’ or structures of CPA Australia?
‘functional’ view of a professional?
A. A process to discipline members for misconduct.
I Professionals are law abiding citizens. B. A requirement to have continued professional
development.
II Professionals behave in an ethical and appropriate manner.
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