TRUE OR FALSE

1. A CPA under subpoena may be forced to divulge confidential information concerning a client.
2. When faced with significant ethical issues, professional accountants should resign from their posts and submit an information memorandum to an appropriate representative of the organization.
3. It is ethical for a CPA to serve as a treasure of a civic organization without compensation.
4. A CPA who exercises the degree of care which the ordinarily prudent person would exercise under the circumstances will not be considered negligent.

MULTIPLE CHOICE

1.To safeguard integrity in financial reporting, the business firm should do the following except

a.Request the external auditor to attend the annual general meeting.

b.Disclose the functions reserved to the board and those delegated to management.

c.Establish an audit committee

d.Disclose the policy concerning trading in company securities by directors, officers and employees.

2.Which situation could pose a threat to compliance with the fundamental principle?

a. accounting firm announced in a local newspaper the opening of its new branch

b.a partner was made an honorary board of trustee in an audit client

c.an accounting firm maintains its own social media account

d.a partner's father-in-law invested 60% of his wealth in an audit client