Question 1

The materiality of a conflict of interest should be evaluated from the perspective of:

Accepted Answer

A)   Whether a reasonable client would consider the conflict to be material
B)   Whether a client, acting unreasonably or reasonably, would consider the conflict to be material
C)   Whether an objective observer who is reasonably informed about the surrounding facts would conclude that a conflict of interest is material
D)   Whether the CPA subjectively, from his or her own vantage point, has concerns about two or more material interests clashing

Question 2

An auditing firm has a standard fee policy that it maintains internally and uses in bidding on auditing projects.However,in preparing bids,it increases its audit fee by up to 20% for corporate audit clients that have December 31 fiscal year-ends and lowers its audit fees by up to 30% for government entities that have fiscal years that end during the summer months.The auditing firm justifies this pricing practice by noting that its personnel are overwhelmed with work during the end-of-year "busy season," but often are idle during the summer months.This auditor:

Accepted Answer

A)   Does not have a conflict of interest
B)   Has a dual-client conflict of interest
C)   Has an accountant-client conflict of interest, even if this pricing differential is cost-justified
D)   Is not acting with integrity, unless it discloses this pricing policy to all affected clients

Question 3

Many companies adopt policies that preclude key employees from owning stock in company suppliers.Companies establish this type of policy to:

Accepted Answer

A)   Make it more difficult for key employees to leave their jobs to commence working for a supplier
B)   Make it more difficult for key employees to share confidential trade secrets with a supplier
C)   Prevent conflicts of interest that might be difficult to detect
D)   Prevent conflicts of interest, even though they usually are easy to detect

Question 4

A CPA provides services to two clients in the same industry.Both clients have been informed of this fact and have acknowledged their approval in writing.As a result:

Accepted Answer

A)   The CPA nonetheless is violating professional standards concerning conflicts of interest
B)   The duty of confidentiality has been waived and does not apply to the two accountant-client relationships mentioned
C)   Must be careful to not share specific information learned from one client with the other client
D)   Must be careful to not utilize general industry experience gained from serving one client to benefit the other client

Question 5

For a CPA who performs auditing services,the most significant conflict of interest that is likely to arise is between:

Accepted Answer

A)   Two clients who both sell the same product in different geographic markets
B)   Two clients who both are aggressively pursuing sales to the same prospective customer
C)   The client's interest and the public interest
D)   The CPA's interest and another CPA's interests

Question 6

A CPA performs tax advisory services,but it does not provide tax return preparation services.For this CPA,the most significant conflict of interest that is likely to arise is between:

Accepted Answer

A)   The AICPA's Code of Professional Conduct and IRS Regulations regarding professional conduct
B)   The Internal Revenue Code and state tax codes
C)   The client and the IRS
D)   The duty of loyalty to the client and a duty to the public interest

Question 7

A CPA's conflicts of interest are determined by:

Accepted Answer

A)   The CPA herself
B)   The accountancy licensing board of the state in which she works as an accountant
C)   The AICPA Conflicts Enforcement Committee
D)   The AICPA committee that evaluates issues of independence, objectivity, and conflicts of interest

Question 8

According to the IFAC Code of Conduct,the determination of whether a professional accountant has,or does not have,a conflict of interest is resolved by:

Accepted Answer

A)   The IFAC Ethics Committee, if the conflict of interest is challenged by the accountant's client
B)   Balancing costs to the client and to society against the financial benefits to the CPA
C)   Applying the Public Interest Principle
D)   By the professional accountant, using professional judgment

Question 9

The concept of "discounting," in the context of accountant conflicts of interest,means that:

Accepted Answer

A)   An accountant, in evaluating the reliability of a client statement, applies greater professional skepticism
B)   A client, in evaluating the reliability of its accountant's statement, applies greater skepticism
C)   An accountant weighs immediate satisfaction more heavily than deferred satisfaction
D)   A prospective client, in listening to an accountant, weighs immediate satisfaction more heavily than deferred satisfaction

Question 10

The determination of whether an American CPA has,or does not have,a conflict of interest is resolved by:

Accepted Answer

A)   A CPA on his or her own
B)   The Conflicts Advisory Board of the AICPA
C)   A board of the AICPA other than the Conflicts Advisory Board
D)   A mediation process between the CPA and its client

Question 11

Two CPAs are good friends as well as partners together in a CPA firm.They recently invested their money together to buy an apartment building.One of the tenants in the apartment building is an employee of their CPA firm,and another tenant is the father of one of the two CPAs.The father's lease terminates soon and the father wishes to renew the lease at the same rental amount that he currently is paying.Under the AICPA's Code of Professional Conduct:

Accepted Answer

A)   Two conflicts of interest exist
B)   The father's status as a tenant creates a conflict of interest that cannot be corrected by safeguards
C)   The father's status as a tenant creates a conflict of interest that can be remedied by safeguards
D)   No conflicts of interest exist

Question 12

A CPA firm knows that clients find it difficult to change auditors after a professional relationship has been in place for several years because the termination of an auditor often makes investors concerned about the trustworthiness of a company's financial statements.To take advantage of this fact,this CPA firm routinely bids on new audit engagements at a fee that is likely to be 25 percent lower than the fees bid by its competitors.The CPA firm plans to recoup this fee differential by steadily raising its fees to above-market rates in subsequent years.The CPA firm's policy creates:

Accepted Answer

A)   A current conflict of interest
B)   A foreseeable future conflict of interest
C)   An appearance of a conflict of interest, but not an actual one
D)   No conflict of interest

Question 13

The concept of "moral licensing," in the context of conflicts of interest,relates to:

Accepted Answer

A)   A person receiving actual consent to proceed in a professional relationship, despite the potential for a conflict of interest to arise
B)   A person receiving implied consent to proceed in a professional relationship, despite the potential for a conflict of interest to arise
C)   A person who potentially will benefit from a conflict of interest agreeing to make periodic payments to reimburse any party who is adversely affected by the conflict of interest
D)   A person making exaggerated claims about goods or services after having disclosed influences that create the appearance of a conflict of interest

Question 14

A CPA usually charges $3,000 to prepare a corporate income tax return,including all supplemental schedules.This CPA has agreed to charge the CFO of a mid-size corporation only $10 to prepare the CPA's personal tax return and $5,000 to prepare the corporation's tax return.This CPA:

Accepted Answer

A)   Is engaged in moral licensing
B)   Has an accountant-client conflict of interest
C)   Has a dual-client conflict of interest
D)   Is not acting with integrity

Question 15

What is an apparent conflict of interest? Provide an example.

Accepted Answer

An apparent conflict of interest occurs ...

Question 16

An accountant's conflict of interest:

Accepted Answer

A)   Always can be waived by a client
B)   Never can be waived by a client
C)   Sometimes cannot be waived by a client
D)   Cannot be waived by the doctrine of implied consent, according to the IFAC Code of Conduct

Question 17

An employee at an information systems consulting firm recently asked a partner at the firm for a 20% pay raise.The partner said that this request was excessive.To resolve this issue amicably,the employee and the partner agreed that the firm's managing partner,who is well-respected,would mediate this issue and determine the fair amount of the pay raise.All parties agreed to this arrangement.The managing partner who is deciding this issue is a CPA.She:

Accepted Answer

A)   Does not have to disclose her conflict of interest to this employee because she is not a practicing CPA
B)   Does not have to make any disclosures because none are needed
C)   Does have to disclose her conflict of interest, but she does not need to get the employee's consent
D)   Does have to disclose her conflict of interest and does need to get the employee's explicit consent

Question 18

The IFAC code of conduct recognizes the concept of "implied consent." Implied consent,in the context of conflicts of interest,means that:

Accepted Answer

A)   A professional accountant may assume that a client has consented to a conflict of interest based on the surrounding circumstances
B)   A professional accountant may insist, before commencing work on a project, that a client consent to a potential conflict of interest
C)   Actual consent to a present-day conflict of interest also will be considered to constitute consent to any future conflicts of interest that may arise
D)   The likelihood of a conflict arising in the near future can be reasonably inferred from surrounding circumstances

Exam 11: Conflicts of Interest

The concept of "moral licensing," in the context of conflicts of interest,relates to:

Correct Answer
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The determination of whether an American CPA has,or does not have,a conflict of interest is resolved by:

Correct Answer
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According to the IFAC Code of Conduct,the determination of whether a professional accountant has,or does not have,a conflict of interest is resolved by:

Correct Answer
verified

Correct Answer
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For a CPA who performs auditing services,the most significant conflict of interest that is likely to arise is between:

Correct Answer
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An accountant's conflict of interest:

Correct Answer
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Correct Answer
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The materiality of a conflict of interest should be evaluated from the perspective of:

Correct Answer
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Many companies adopt policies that preclude key employees from owning stock in company suppliers.Companies establish this type of policy to:

Correct Answer
verified

Correct Answer
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The concept of "discounting," in the context of accountant conflicts of interest,means that:

Correct Answer
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What is an apparent conflict of interest? Provide an example.

Correct Answer
Answered by ExamLex AI
An apparent conflict of interest occurs ...
View Answer

A CPA usually charges $3,000 to prepare a corporate income tax return,including all supplemental schedules.This CPA has agreed to charge the CFO of a mid-size corporation only $10 to prepare the CPA's personal tax return and $5,000 to prepare the corporation's tax return.This CPA:

Correct Answer
verified

Correct Answer
verified

The IFAC code of conduct recognizes the concept of "implied consent." Implied consent,in the context of conflicts of interest,means that:

Correct Answer
verified

A CPA's conflicts of interest are determined by:

Correct Answer
verified

A CPA performs tax advisory services,but it does not provide tax return preparation services.For this CPA,the most significant conflict of interest that is likely to arise is between:

Correct Answer
verified

A CPA provides services to two clients in the same industry.Both clients have been informed of this fact and have acknowledged their approval in writing.As a result:

Correct Answer
verified

Exam 11: Conflicts of Interest

The concept of "moral licensing," in the context of conflicts of interest,relates to:

Correct AnswerverifiedShow Answer

The determination of whether an American CPA has,or does not have,a conflict of interest is resolved by:

Correct AnswerverifiedShow Answer

According to the IFAC Code of Conduct,the determination of whether a professional accountant has,or does not have,a conflict of interest is resolved by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a CPA who performs auditing services,the most significant conflict of interest that is likely to arise is between:

Correct AnswerverifiedShow Answer

An accountant's conflict of interest:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The materiality of a conflict of interest should be evaluated from the perspective of:

Correct AnswerverifiedShow Answer

Many companies adopt policies that preclude key employees from owning stock in company suppliers.Companies establish this type of policy to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The concept of "discounting," in the context of accountant conflicts of interest,means that:

Correct AnswerverifiedShow Answer

What is an apparent conflict of interest? Provide an example.

Correct AnswerAnswered by ExamLex AIAn apparent conflict of interest occurs ...View AnswerShow Answer

A CPA usually charges $3,000 to prepare a corporate income tax return,including all supplemental schedules.This CPA has agreed to charge the CFO of a mid-size corporation only $10 to prepare the CPA's personal tax return and $5,000 to prepare the corporation's tax return.This CPA:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The IFAC code of conduct recognizes the concept of "implied consent." Implied consent,in the context of conflicts of interest,means that:

Correct AnswerverifiedShow Answer

A CPA's conflicts of interest are determined by:

Correct AnswerverifiedShow Answer

A CPA performs tax advisory services,but it does not provide tax return preparation services.For this CPA,the most significant conflict of interest that is likely to arise is between:

Correct AnswerverifiedShow Answer

A CPA provides services to two clients in the same industry.Both clients have been informed of this fact and have acknowledged their approval in writing.As a result:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
An apparent conflict of interest occurs ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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