- This topic has 1 reply, 2 voices, and was last updated 9 years, 8 months ago by
.
-
Topic
-
I have REG on 29th Friday. Please help me on below mcqs
1. Mark & Jones, CPAs, and its client, Smith Lighting, are discussing a possible advisory engagement in which the firm would review Smith’s account receivable (A/R) system and recommend changes that would improve the company’s collection process and speed collections. Smith proposes to pay Mark & Jones a fee based on improved performance in A/R collections. Would such an arrangement raise any ethical concerns?
A. No, but only if Smith is a publicly traded company subject to SEC and PCAOB rules.
B. No, provided Mark & Jones documents the arrangement clearly in the engagement letter.
C. Yes, but only if Mark & Jones was performing other services for Smith.
D. Yes, if Mark & Jones also performed a review engagement for Smith.
2. Ben, a consulting manager of George & Co., is considering membership on an audit client’s board of directors. Ben does not provide any services to this client. Which of the following statements describing this situation is true?
A. Ben may join the board because he is not an auditor.
B. Ben may join the board because he is not a partner.
C. Ben may not join the board because the rules prohibit all professionals in the firm from serving as a director of a client.
D. Ben may not join the board because only non-managerial employees of the firm may serve as client management.
3. A former client of Aaron Derek, CPA, filed a lawsuit in state court alleging that Aaron failed to exercise due care in the performance of tax and compilation services performed in 2011. Aaron firmly believes that he performed his services with competence and diligence. In his defense, he plans to admit to making one minor error which he says was inadvertent and did not have a material effect on the client’s taxes or financial position. In light of his admission, has Aaron complied with the AICPA Code’s standard of due care and why?
A. No. He obviously did not discharge his professional responsibilities with competence and diligence.
B. No. He did not perform professional services to the best of his abilities.
C. Yes. He has chosen to be honest in reporting that he made an error.
D. Yes. The AICPA standard for due care does not require CPAs to be infallible.
- You must be logged in to reply to this topic.
