When a CPA is associated with financial statements that do not comply with promulgated GAAP because the statements would be misleading without the departure, the CPA is not required to disclose 14. A. The reasons compliance would have been misleading. B. The approximate effects of the departure in comparison to the application of GAAP. C. The reason the departure does not have a material effect on the statements. D. The departure. AICPA Conduct Rule 301, Confidential Client Information, is violated when a member in public practice 15. A. Provides client profit and loss percentages to a trade association without the clients consent. B. Performs consulting services for similar clients. C. Advises potential consulting services clients about previous problems on similar engagements. D. Uses outside computer services to process tax returns. An accounting firms independence is most likely to be impaired when 16. A. The firm has a material financial interest in a nonclient but does not know of the clients material financial interest in the investee. B. An immediate family member is employed by the client in other than a key position. C. The firm and the client have a material cooperative arrangement. D. In an agreed-upon procedures engagement, the firm is independent of the responsible party but not the party that engaged the firm. Which of the following most completely describes how independence has been defined by the accounting profession? 17. A. Avoiding the appearance of significant interests in the affairs of an audit client. B. Accepting responsibility to act professionally and in accordance with a professional code of ethics. C. Possessing the ability to act with integrity and objectivity. D. Performing an audit from the viewpoint of the public. Which action is not considered an act discreditable to the accounting profession? 18. A. Being finally determined by a court of competent jurisdiction to have violated any of the federal antidiscrimination laws. B. Having a bank collect notes received from a client in payment of fees. C. Failing to follow standards and procedures established by governmental agencies in audits of grants by those agencies. D. Negligently permitting another to sign a document containing materially false and misleading information. According to the professions standards, which of the following statements is true regarding the standards a CPA should follow when recommending tax return positions and preparing tax returns? 19. A. A CPA may recommend a position that the CPA concludes is frivolous as long as the position is adequately disclosed on the return. B. A CPA may sign a tax return as preparer knowing that the return takes a position that will not be sustained if challenged. C. A CPA will usually not advise the client of the potential penalty consequences of the recommended tax return position. D. A CPA may recommend a position in which the CPA has a good faith belief that the position has a realistic possibility of being sustained if challenged. According to the Interpretations of Conduct Rule 102, Integrity and Objectivity, a member of the AICPA 20. A. Is subject to Rule 102 when engaged in teaching but not research. B. Who has a dispute with his/her supervisor about statement preparation has an obligation to act if a material misstatement would otherwise result