19-14 Which of the following statements best explains why public accounting, as a professional, promulgates ethical standards and establishes means for ensuring their observance?

a. Vigorous enforcement of an established code of ethics is the best way to prevent unscrupulous acts.

b. Ethical standards that emphasize excellence in performance over material rewards establish individual reputations for competence and character.

c. Ethical standards are established so that users of accounting services know what to expect and accounting professionals know what behaviors are acceptable, and so that discipline can be applied when necessary

d. A requirement for a profession is to establish ethical standards that primarily stress responsibility to entities and colleagues.

19-15 All of the following non-audit services are identified by the SEC as generally impairing an auditor's independence concerning an audited entity excepta. Information systems design and implementation.b. Human resource services.c. Management functions.d. Some specific tax services.e. All of the above are seen by the SEC as impairing independence. LO 19-619-16 Under the SEC's rules regarding independence, which of the following must an entity disclose?a. Only fees for the external audit.b. Only fees for internal and external audit services are provided by the audit firm.c. Fees for the external audit, audit-related fees, tax fees, and fees for other non-audit services performed by the audit firm.d. Only fees for systems implementation and design and non-audit services performed by the audit firm. LO 19-419-17 The AICPA Code of Professional Conduct contains both general ethical principles that are aspirational in character and ana. List of violations that would cause the automatic suspension of a CPA's license.b. Set of specific, mandatory rules describing minimum levels of conduct a CPA must maintain.c. Description of a CPA's procedures for responding to an inquiry from a trial board.d. Complete list of all the different kinds of crimes that would be considered as acts discreditable to the profession. LO 19-519-18 In which of the following situations would a CPA's independence be considered impaired according to the Code of Professional Conduct?1. The CPA has a car loan from a bank that is an audited entity. The loan was made under the same terms available to all customers.2. The CPA has a direct financial interest in an audited entity, but the investment is maintained in a blind trust.3. The CPA owns a commercial building and leases it to an audited entity. The rental income is material to the CPA.a. 1 and 2.b. 2 and 3.c. 1 and 3.d. 1, 2, and 3. LO 19-519-19 An audited company has not paid its 2018 audit fees. According to the AICPA Code of Professional Conduct, for the auditor to be considered independent concerning the 2019 audit, the 2018 audit fees must be paid before thea. 2018 report is issued.b. 2019 fieldwork is started.c. 2019 report is issued.d. 2020 fieldwork is started. LO 19-519-20 Which of the following legal situations would be considered to impair the auditor's independence?a. An expressed intention by the present management to commence litigation against the auditor, alleging deficiencies in audit work for the entity, although the auditor considers that there is only a remote possibility that such a claim will be filed.b. Actual litigation by the auditor against the entity for an amount, not material to the auditor or the financial statements of the entity arising out of disputes as to billings for management advisory services.

c. Actual litigation by the auditor against the present management, alleging management fraud or deceit.d. Actual litigation by the entity against the auditor for an amount not material to the auditor or the financial statements of the entity arising out of a dispute as to billings for tax services. LO 19-5,19-21 A violation of the profession's ethical standards is least likely to occur when a CPA 19-7 a. Purchases another CPA's accounting practice and bases the price on a percentage of the fees accruing from entities over three years.b. Receives a percentage of the amounts invested by the CPA's audit entities in a tax shelter with the entities' knowledge and approval.c. Has a public accounting practice and is president and sole stockholder of a corporation that engages in data processing services for the public. The CPA often refers his attest entities to the data processing company.d. Forms an associationnot a legally binding partnershipwith two other sole practitioners and calls the association Adams, Betts & Associates, CPAs. LO 19-219-22 Rick, an independent CPA, must make an ethical judgment related to the audit of an entity. If he primarily focuses on whether his decision might yield unfair advantages for some at the expense of others, he is usinga. A utilitarian perspective.b. A rights-based approach.c. A justice-based perspective.d. Rule-based AICPA guidelines. LO 19-219-23 During the audit of Moon Co., the auditor disagrees with management's estimation of collectible accounts receivable. The possible misstatement amount is material. Which of the statements below should weigh most heavily for the auditor in this instance?a. Moon management has the right to make company estimates.b. Requiring an adjustment to the allowance for doubtful accounts would give stockholders access to fair and adequate information.c. There is a small but reasonable chance that accounts receivable as stated by MoonCo. might turn out to be fully collectible.d. The interests of Moon Co., the auditor, and the public should be weighed equally in the decision. LO 19-719-24 Without the consent of the entity, a CPA should not disclose confidential entity information contained in working papers to a(n)a. Authorized quality control, review board.b. A successor CPA firm that has been engaged to audit the former audit entity.c. Federal court that has issued a valid subpoena.d. The disciplinary body was created under state statute. LO 19-819-25 One of a CPA firm's basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this basic objective is provided througha. A system of quality control.b. A system of peer review.c. Continuing professional education.d. Compliance with generally accepted reporting standards. LO 19-919-26 In connection with the element of engagement performance, a CPA firm's system of quality control should ordinarily include procedures covering all of the following excepta. Performance evaluation.b. Consistent, high-quality engagement performance.c. Supervision responsibilities.d. Review responsibilities