[DiXing82]

Could someone help me with the following ethics exam questions? I searched in the ethics textbook AICPA provided but still couldn’t get answers. I have failed this exam once. Please help! Many thanks!

1. Jones, a consulting manager of Miller & Co., is considering membership on an audit client’s board of directors. Jones does not provide any services to this client. Which statement describing this situation is correct under AICPA rules?
a. Jones may join the board because he is not an auditor.
b. Jones may join the board because he is not a partner.
c. Jones may not join the board because the rules prohibit all firm professionals from serving as a director of a client.
d. Jones may not join the board because only non-managerial employees of the firm may serve as client management.

2. Becker & Smith, CPAs, and its client, Troper Lighting, are discussing a possible advisory engagement in which the firm would review Troper’s accounts receivable system and recommend changes that would streamline the company’s collection process. Troper will pay Becker & Smith 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. Yes, but only if Becker & Smith was performing other services for Troper.
b. Yes, if Becker & Smith also performed a review engagement for Troper.
c. No, but only if Troper is a publicly traded company subject to SEC and PCAOB rules.
d. No, provided Becker & Smith documents the arrangement in the engagement letter.

3. Feld & Company, CPAs, has provided annual audit and tax advisory services to Maris Corporation for several years. Last year, Maris experienced severe cash flow problems and was unable to pay Feld in full, leaving a significant balance unpaid. Feld is ready to begin fieldwork for the upcoming audit. What options are available to Feld and Maris under the AICPA code?
a. Feld may set up a payment plan with Maris to settle the unpaid fees over the next two years.
b. Feld 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.
c. Maris may give Feld a note with a maturity date no later than one year after the date of the current year report.
d. Maris may have another firm perform the fieldwork and Feld will review the other firm’s work papers and issue the report.

4. Bob Martino is sanctioned by his state board of accountancy for his association with false and misleading financial statements of his employer, Jones Consulting, LLC, a private company. Which situation is the LEAST likely result of the state board’s action?
a. The state board could suspend or revoke Bob’s CPA license.
b. Bob could lose his membership in the AICPA or a state CPA society.
c. Bob could become subject to significant legal liabilities.
d. The Securities and Exchange Commission could fine Bob.

5. A two-office firm, with one office in Chippewa Falls and another in Fargo, has an audit client that sells medical equipment. The lead audit partner for this client conducts the engagement in the Fargo office. Stockholdings in the client by which person would NOT impair the firm’s independence under the AICPA code?
a. A manager in Chippewa Falls who will provide 26 hours of nonattest services to the client this year.
b. A Chippewa Falls staff person who provides no services to the client.
c. A tax partner in the Fargo office who provides no services to the client.
d. A Fargo staff person working on the audit engagement.

6. Which statement best describes how the International Ethics Standards Board for Accountants’ (IESBA) Code impacts the U.S. accounting profession?
a. CPAs in public practice in the U.S. are required to apply the IESBA code, even if they don’t perform services outside the U.S.
b. State boards of accountancy are required to adopt the IFAC’s rules within 90 days of an IESBA rule change.
c. As a member body of IFAC, the AICPAs required to change its bylaws whenever the IESBA changes its rules.
d. The AICPA is required to adopt ethics standards that are at least as restrictive as the IESBA rules

7. Department of Labor (DOL) independence rules apply to
a. All services provided to employee benefit plans.
b. Accounting services provided to employee benefit plans’ sponsors.
c. Audit services provided to employee benefit plans subject to ERISA requirements.
d. All governmental audit and accounting engagements.

8. In which way do DOL independence rules differ from the AICPA rules?
a. The DOL rules on nonattest services are more comprehensive than the AICPA independence
rules.
b. The DOL rules ban auditors from providing actuarial services to benefit plans that they audit.
c. The DOL defines a member much more broadly than the AICPA’s covered member.
d. The DOL permits auditors to perform recordkeeping, whereas the AICPA rules would not.

9. Which statement most accurately describes the Federal Deposit Insurance Corporation’s (FDIC) auditor independence requirements?
a. FDIC independence requirements incorporate requirements for attorneys and actuaries.
b. FDIC independence requirements mirror the AICPA and DOL independence rules.
c. Certain FDIC policy statements address auditor independence.
d. The FDIC has not adopted regulations that incorporate SEC independence rules.

FAR---79
REG---85
AUD---Fail on Jan 2016 Retake on 4/30/2016
BEC---75