For each of the following scenarios, determine if the CPA's actions as described are in violation of the AICPA Code of Professional Conduct.
Yes, the CPA's actions are in violation
No, the CPA's actions are not in violation
QUESTION 1: A CPA has installed a fairly large neon sign over the entrance to her building which reads, "Jane Jones, Certified Public Accountant, Audits, Taxes, Bookkeeping."
Yes
No
QUESTION 2: A CPA places an ad in the local newspaper announcing the admission of new partners to the firm, the relocation of the office, the new phone number, office hours, and hourly rates charged. The ad also mentions that certain of their partners and staff are fluent in Spanish.
Yes
No
QUESTION 3: A state wherein a CPA practices has just passed a law mandating that all municipalities over 10,000 population have annual audits. The CPA and his partners telephone all the council presidents and city managers of cities of that size soliciting their audit work.
Yes
No
QUESTION 4: A CPA, a partner in a one-office accounting firm, has a brother who is a member of the board of directors of an audit client. The partner lives about ten miles from her brother. She and her husband do not have any joint investments with her brother. Social contacts with her brother are infrequent.
Yes
No
QUESTION 5: A CPA audits the books of a corporation in which his wife is a stockholder. The CPA has no financial interest in the client.
Yes
No
QUESTION 6: A CPA audited the financial statements of a client for the year ended December 31, 2011. In November 2011 a partner in the same firm assisted the client in obtaining financing under an arrangement in which the fee for such service would not be paid unless the financing was obtained.
Yes
No
QUESTION 7: A regulatory agency asked a CPA to supply confidential client information in connection with an investigation of the client. The client refused the give the CPA permission to comply with the agency's request, but the CPA supplied the information anyway.
Yes
No
QUESTION 8: A CPA has been served with a validly issued and enforceable subpoena to turn over certain client records that contain confidential client information. The client refused the give the CPA permission to comply with the subpoena, but the CPA turned over the records anyway.
Yes
No
QUESTION 9: A CPA audited a company's financial statements for the year ended June 30, 2012, and was issued stock by the client in payment of the audit fee. Because the stock was immaterial to the CPA's personal net worth, she kept the stock in her investment portfolio.
Yes
No
QUESTION 10: On January 5 2012, a client engages a CPA to perform its audit for the 12 months ended December 31, 2011. In March 2011, the CPA prepared the company's 2010 corporate tax return for which he has still not been paid. The CPA decides to accept the audit engagement and commence with the fieldwork, but has made an arrangement with the client to be paid in full for the 2010 tax engagement prior to the issuance of the 2011 audit report.
Yes
No
QUESTION 11: The trustee of a bankruptcy estate engaged a CPA to audit a client in bankruptcy. The CPA performed the audit for this same client the prior year, and has not been paid. The CPA accepts the audit engagement and commences with fieldwork. No arrangements have yet been made for payment for either audit engagement.
Yes
No
QUESTION 12: A CPA performs payroll preparation services for an audit client, which include preparing and signing payroll checks. The CPA is also responsible for mailing the checks to employees or authorizing a transfer of funds from a client bank account to employees' bank accounts.
Yes
No
QUESTION 13: A CPA has a loan from a client financial institution that the CPA believes meets the requirements for a "grandfathered" loan under Ethics Interpretation 101-5. Periodically, the bank requires the CPA to submit personal financial statements and other information in order to reevaluate the CPA's creditworthiness to renew the loan. Since the CPA believes the loan continues to be considered grandfathered, she continues to audit the client's financial statements on an ongoing basis.
Yes
No
QUESTION 14: A CPA's dependent parent is a 5% limited partner in an audit client of the CPA. The CPA is a partner in his accounting firm.
Yes
No
QUESTION 15: A staff-level CPA participating in a review engagement, has a dependent daughter who owns 10 shares of the review client's stock.
Yes
No
QUESTION 16: A CPA, a partner assigned to a review engagement, has a non-dependent son who is employed by the client as a machine operator.
Yes
No
True and false
QUESTION 1: The purpose of an audit is to express an opinion on whether the financial statements are in accordance with GAAS.
True
False
QUESTION 2: Assertions relating to the financial statements are set forth by the auditor.
True
False
QUESTION 3: An audit should test every item in the financial records of the client.
True
False
QUESTION 4: The completeness assertion posits that all transactions and events that should have been recorded were recorded.
True
False
QUESTION 5: Audits of issuers must follow the standards of the Public Company Accounting Oversight Board.
True
False