MODULE 21 PROFESSIONAL RESPONSIBILITIES

8 MULTIPLE-CHOICE ANSWERS*
2

I. c - - 1 a - - 3 d - - 4 d - - 6 d -
2. d - - 6.
17. ,d - - I.
32. a - - 6.
47. a - - I. b
62. -
-
b -
3. - - 18. b - - 33. b - - 48. d - - 63. c
- -
4. c - - 19. d - - 34. a - - 49. b - - 64. b
- -
5. c - - 20. c - - 35. c - - 50. c - - 65. c - -
6. a - - 2I. a - - 36. b - - SI. b - - 66. c
- -
7. d - - 22. d - - -37. a - - 52. d - -
8. c - - 23. d - - 38. a - - 53. c - -
9. b - - 24. c - - 39. b - - 54. d - -
,
10. a 25. a 40. c 55. d
- - - - - - - -
lI. a - - 26. Cl - - 4I. c - - 56. a - -
12. a - - 27. c - - 42. c - - 57. a - -
13. b - - 28. c - - 43. b - - 58. b - -
14. b - - 29. a - - 44. d - - 59. c - - 1st: _/66= %
c -
15. - - 30. c - - 45. c - - 60. a - - 2nd: ~66= %
-
MULTIPLE-CHOICE ANSWER EXPLANATIONS

A.2. Code of Professional Conduct-Principles
1. Cc) The requirement is to identify the statement that
best describes the meaning of generally accepted auditing
standards. Answer Cc) is correct because generally accepted
auditing standards deal with measures of the quality of the
performance of audit procedures CAU 150). Answer (d) is
incorrect because procedures relate to acts to be performed,
not directly to the standards. Answer (b) is incorrect be-
cause generally accepted auditing standards have been is-
sued by predecessor groups, as well as by the Auditing
Standards Board. Answer (a) is incorrect because there may
or may not be universal compliance with the standards.
2. (d) All of these can result in the automatic expul-
sion of the member from the AICPA. Answer (a) is incor-
rect because although the conviction of a felony can result in
automatic expulsion, likewise can the other two. An-
swers (b) and Cc) are incorrect because all three can result in
automatic expulsion from the AICPA.
A.3. Code of Professional Conduct-Rules, Interpreta-
tions, and Rulings
3. (b) Answer (b) is correct because an effective
corporate governance structure is a control that can be
implemented by a client that increases independence of the
attest team. Answer (a) is incorrect because it is a safeguard
that is implemented by regulation or the CP A firm. Answer
Cc) is incorrect because it is a safeguard that is required by
regulation or the CPA firm. Answer (d) is incorrect because
it represents a threat rather than a safeguard.
statements. This is a key position as defined by the
Interpretation of Rule 10 1.
6. (a) According to Rule 102 of the Code of Profes-
sional Conduct, in performing any professional service, a
member shall maintain objectivity and integrity, avoid con-
flicts of interest, and not knowingly misrepresent facts. An-
swer (a) is correct as. this would be knowingly misrepre-
senting the facts. Answers (b) and (d) are incorrect as these
are not intentional misstatements. Answer (c) is incorrect
because while one must remain objective" while performing
consulting services, independence is not required unless the
CP A also performs attest services for that client.
7. (d) The requirement is to determine which act is
generally prohibited. Answer (d) is correct because "If an
engagement is terminated prior to completion, the member is
required to return only client records" (ET 501). Answer (a)
is incorrect because issuing a modified report explaining a
failure to follow a governmental regulatory agency's stan-
dards when conducting an attest service is not prohibited.
Answer (c) is incorrect because accepting a contingent fee is
, allowable when representing a elient in an examination by a
revenue agent of the client's federal or state income tax re-
turn (ET 302). Answer (b) is incorrect because revealing
confidential client information during a quality review of a
professional practice by a team from the state CP A society is
not prohibited (ET 301).
8. (c) According to Rule 203 of the Code of Profes- '
sional Conduct, CP As are allowed to depart from a GASB

4. (c) Answer (c) is correct because the team member
would be reviewing his or her own work. Answer (a) is
incorrect because this is an example of a familiarity threat.
Answer (b) is incorrect because this is an example of a
safeguard to threats to independence. Answer (d) is
incorrect because this represents a financial self-interest
threat to independence.
5. (c) According to the Code of Professional Conduct,
Rule 101 regarding independence, a spouse may be
employed by a client if s/he does not exert significant
influence over the contents of the client's financial
Statement only when results of the Standard would be \
misleading. Examples of possible circumstances justifying
departure are new legislation and a new form of business
transaction.
9. (b) The requirement is to determine whether aCPA
may hire a non-CPA systems analyst and, if so, under what
conditions. Answer (b) is correct because ET 291 allows
such a situation when the CP A is qualified to supervise and
evaluate the work of the specialist. Answer (a) is incorrect
because the CP A need not be qualified to perform the spe-
cialist's tasks. Answer (c) is incorrect because non-CPA
professionals are permitted to be associated with CP A firms

* Explanation of how to use this performance record appears on page 12.