ACCT 4553 Ethics Final Part 1(Complete And Graded A+)2022

Jane, a partner in a CPA firm, borrows $100,000 on a secured note from one of the firm's bank audit clients to build a new dormer on her house. The amount of the loan is material to Jane. Jane practices in the same office as the lead partner on the bank's audit. Jane will not provide any services to the bank and she is unable to influence the engagement. Is Jane's independence impaired under the AICPA code? A.) No, because Jane is not on the attest team or able to influence the engagement. B.) Yes, because Jane borrowed the money from an audit client while she was a covered member. C.) No, because the note is secured and is related to Jane's primary residence. E.) Yes, because the loan is material to Jane's net worth B.) Yes, because Jane borrowed the money from an audit client while she was a covered member. Cartwright & Cheyenne, CPAs (C&C), and its client, Lott Lighting, are discussing a possible advisory engagement in which C&C would review Lott's accounts receivable system and recommend changes that would streamline the company's collection process. Lott will pay C&C a fee based on improved performance in accounts receivable collections. Would this contingent fee arrangement raise any ethical concerns under the profession's rules? A.) No, provided C&C documents the arrangement in the engagement letter. B.) Yes, but only if C&C was performing other services for Lott. C.) No, but only if Lott is a publicly-traded company subject to SEC and PCAOB rules. D.) Yes, if C&C also performed a review engagement for Lott. D.) Yes, if C&C also performed a review engagement for Lott. Under SEC rules, which relationships between a covered person and an SEC client are NOT prohibited? A.) Immaterial landlord-tenant relationships B.) Joint business ventures C.) Agreements to share costs or profits D.) Limited partnership agreements A.) Immaterial landlord-tenant relationships Duncan & Co., CPAs, has provided annual audit and tax advisory services to Victoria Corp. for several years. Last year, Victoria experienced severe cash flow problems and was unable to pay Duncan in full, leaving a significant balance unpaid. Duncan is ready to begin fieldwork for the upcoming audit. What options are available to Duncan and Victoria under the AICPA code? A.) Duncan may perform the audit as long as the unpaid fees relating to the prior year are paid in full before the current-year report is issued. B.) Duncan may set up a payment plan with Victoria to settle the unpaid fees over the next two years. C.) Victoria may give Duncan a note with a maturity date not later than one year after the date of the current-year report. D.) Victoria may have another firm perform the fieldwork and Duncan will review the other firm's work papers and issue the report. A.) Duncan may perform the audit as long as the unpaid fees relating to the prior year are paid in full before the current-year report is issued. Suppose a statute exists in your state that allows you to place a lien on client records in the event of unpaid fees. Given these facts, are you obligated to return records to a client who has not paid his fees? A.) No, not until he pays the fees. B.) Yes B.) Yes Leeann Raasch, CPA, runs a small CPA firm in Podunk, Oklahoma. Leeann was asked to conduct an audit of an oil-drilling company with complex operations. Leeann went to school in Illinois and has only recently moved her business to Oklahoma. All of her past audit work has been involved with banks and insurance companies—none of which maintain any significant amount of inventory. Leeann agrees to conduct the audit. Since she's just getting started in Oklahoma and had a lot of expenses associated with her move, she's not willing to spend the money to bring in someone with more oil and gas experience. Which of the following fundamental principles has Leeann violated? A.) Leeann has not violated any of the fundamental principles. B.) Professional competence and due care C.) Confidentiality D.) Integrity E.) Professional behavior F.) Objectivity B.) Professional competence and due care Matthew Davasiachen, CPA, is conducting an audit for Trent & Taylor Co. Trent & Taylor's financial statements include a complicated footnote that deals with revenue from trading of corn and soybean futures. Matthew sits down with the CEO and CFO to gain a better understanding of the footnote. Their charming CFO, Kaytlin Reynolds, says, "Why, Matthew, please don't concern yourself with that. It's a very complex process and somewhat of a black box to anyone who doesn't have years of experience in futures trading. You only have an accounting degree and you're a little wet behind the ears. It would take years of experience to get you enough up to speed that you could understand this business." What type of threat is present? A.) No threat B.) Adverse interest threat C.) Undue influence threat D.) Self-review threat E.) Self interest threat C.) Undue influence threat Jodie prepared Form 1040, including a Schedule C, for her client, Richard, a sole proprietor. Which statement best describes her obligations under SSTS No. 7, Form and Content of Advice to Taxpayers? A.) Her advice should always comply with the standards in SSTS No. 1, Tax Return Positions. B.) She should communicate with Richard about subsequent developments affecting her previous advice, even if she is not contractually obligated to do so. C.) Her advice to Richard should always be in writing and consented to by him. D.) She should employ judgment in determining the form and content of her advice to Richard, even if the IRS or other regulators have specific requirements. A.) Her advice should always comply with the standards in SSTS No. 1, Tax Return Positions. You are a manager in the quality control group of the firm Merrill & Clement. The firm's primary office is in Oklahoma City, and it has four other offices in Oklahoma and Texas. Recently, the firm acquired a new client—NAL Co. NAL is a private toy manufacturing company. Personnel in your firm's Oklahoma City office will audit NAL's financial statements. Olivia Pack, audit manager, is located in the firm's Tulsa office. She will have no client responsibilities of any kind relating to the NAL engagement. Is Olivia a covered member who must be independent of NAL? A.) Yes, because the Oklahoma City office is within 100 miles of the Tulsa office. B.) No, because Olivia is a manager in the Tulsa office. C.) No, because Olivia provides no services to NAL. D.) Yes, because Olivia is a manager in the firm. C.) No, because Olivia provides no services to NAL. On September 30, 2016, Hilger & Sandoval Accounting (H&S) signed an engagement letter to audit Carvajal Corporation for the 12-month period ending December 31, 2016. What is the earliest data on which H&S would be required to be independent of Carvajal? A.) October 11, 2016. B.) December 31, 2016. C.) November 4, 2016. D.) January 1, 2016. D.) January 1, 2016. A practitioner is engaged to prepare a client's federal income tax return for 2013 and 2014. The practitioner files the 2013 return on the client's behalf. After the 2014 return is prepared, the client disputes the fees for the 2014 tax engagement, terminates the relationship, and requests all tax returns and related records. The client has not yet paid for preparation of the 2014 return. Under IRS Circular No. 230, which records must the practitioner return to the client? A.) Schedules the practitioner prepared, which the client needs to file in its 2014 federal income tax return. B.) The engagement letter executed by the client for preparation of the 2014 federal income tax return. C.) An appraisal the practitioner prepared in connection with the 2013 federal income tax return. D.) Notes the practitioner took when meeting with the client about the 2013 and 2014 tax returns. C.) An appraisal the practitioner prepared in connection with the 2013 federal income tax return.