Business & Professional Ethics for Directors, Executives & Accountants, 5e,
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Business & Professional Ethics for Directors, Executives & Accountants, 6e
Multiple Choice Questions
Chapter 6 Professional Accounting in the Public Interest, Post Enron
1) The following elements are essential features of a profession:
a. Extensive training, license or certification, and provision of important services to society
b. Extensive training, primarily intellectual skills, and representation by professional
organizations
c. Extensive training, provision of important services to society, and primarily intellectual skills
d. License or certification, representation by professional organizations, and autonomy
e. License or certification, autonomy, and provision of important services to society
2) The following value is not necessary for an accounting professional:
a. Honesty
b. Integrity
c. Objectivity
d. A primary commitment to self-interest
e. All but one of the above
3) The following duties are essential to maintaining a fiduciary relationship in the accounting profession:
a. Development and maintenance of required knowledge and skills
b. Maintenance of trust
c. Maintenance of an acceptable personal reputation
d. All of the above
e. (a) and (b) only
4) Professional Accountants, in their fiduciary role, owe primary loyalty to:
a. The accounting profession
b. The client
c. The general public
d. Government regulations
e. All of the above
5) According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a
motive for doing right:
a. Pre-conventional
b. Conventional
c. Post-conventional
d. Autonomous
e. Principled
6) According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law
and order are a motive for doing right:
a. Pre-conventional
b. Conventional
c. Post-conventional
d. Autonomous
e. Principled
7) Which of the following is not a fundamental principle in codes of conduct for professional
accountants?
a. Act in the client’s best interest
b. Objectivity and independence
c. Maintain the good reputation of the profession
d. Maintain confidentiality
e. Not to be associated with misleading information
8) If a professional accountant is billing an audit client for more hours than those actually worked, he
will be violating the following fundamental principle:
a. Objectivity
b. Professional due care
c. Integrity
d. Confidentiality
e. All of the above
9) If a professional accountant is auditing a public company and she receives company shares as
payment for her audit services, she will be violating the following fundamental principle:
a. Integrity
b. Objectivity
c. Professional due care
d. Confidentiality
e. All of the above
Business & Professional Ethics for Directors, Executives & Accountants, 5e,
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10) A professional accountant is auditing client A and providing consulting services to client B. Both
clients are in the same industry. If the professional accountant uses specific information from client
A’s audit to prepare a business plan for client B, he will be violating the following fundamental
principle:
a. Integrity
b. Objectivity
c. Professional due care
d. Confidentiality
e. All of the above
11) The adoption of the following measures would reduce the expectation gap and lessen public
misunderstanding of the auditor’s role
a. Publish a statement of management responsibility
b. Auditor to report annually to audit committee
c. Expand audit report to clarify auditor’s role and the level of assurance
d. (a) and (b)
e. (a) and (c)
12) The recommendation of appointment and review of the external auditors by the audit committee is an
example of:
a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or
regulation
b. Safeguards reducing the risk of conflict of interest between an auditor and management
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm’s
own systems and procedures
d. All of the above
e. (a) and (c) only
13) Using partners who do not report to audit partners for the provision of non-assurance services to an
assurance client would be an example of:
a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or
regulation
b. Safeguards reducing the risk of conflict of interest within a client
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm
d. All of the above
e. (a) and (c) only
14) The external review of an audit firm’s quality control system is an example of:
a. Safeguards reducing the risk of conflict of interest within the audit profession
b. Safeguards reducing the risk of conflict of interest within a client
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm
d. All of the above
e. (a) and (c) only
15) This organization is developing an international code of conduct for professional accountants:
a. International Accounting Standards Board
b. European Federation of Accountants
c. Financial Accounting Standards Board
d. Public Accounting Oversight Board
e. International Federation of Accountants
16) This organization issues auditing standards, carries out inspections of public accounting firms
auditing U.S. public clients, and imposes sanctions when applicable:
a. CPAB
b. PCAOB
c. SEC
d. FASB
e. AICPA
17) This organization can issue auditing standards in the U.S.:
a. AICPA
b. FASB
c. SEC
d. PCAOB
e. All of the above
18) A professional accounting firm has several audit and tax clients; however, a single client represents
40% of the firm’s revenue. This situation could result in the following threat to professional
independence:
a. Self-review
b. Intimidation
c. Advocacy
d. Familiarity
e. Over-dependence
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19) A professional accountant has been the partner in charge of a particular audit client for the past eight
years. This situation could result in the following threat to professional independence:
a. Self-review
b. Intimidation
c. Advocacy
d. Familiarity
e. None of the above
20) A new audit client was taken on by a professional accountant’s firm. The fee for this client’s audit
engagement is significantly lower than that charged by the prior accountants. This situation could
result in the following threat to professional independence:
a. Self-review
b. Intimidation
c. Advocacy
d. Familiarity
e. None of the above