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A) The rules of conduct for structuring and conducting audits and other attestation engagements
B) The rules of conduct for conducting audits, but no other forms of attestation
C) The rules for resolving technical judgments in achieving a fair presentation of financial statements
D) The normative rules of ethical behavior that guide professional accountants
F) A) and C)
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An IRS (Internal Revenue Service) agent ...View Answer
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One tax accounting decision that may req...View Answer
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A) Applies only to accountants who work in public accountant practice as licensed CPAs
B) Potentially applies to all licensed CPAs, whether they work in government, industry, academia, or public practice
C) Provides a comprehensive definition of the accounting standards that collectively comprise GAAP
D) Provides a comprehensive set of the accounting standards that comprise both GAAP and GAAS
F) None of the above
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A) That are mandatory minimum rules of behavior that all members of the AICPA must comply with
B) That, when violated, constitute crimes under most, if not all, state accountancy licensing statutes
C) That are aspirational goals, but yet are rarely achieved by most professional accountants
D) That establish worldwide standards that all professionals accountants must, at minimum, comply with
F) A) and C)
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A) All CPAs who are compelled by state law to join the AICPA
B) All CPAs who have valid CPA licenses in good standing
C) All CPAs who have valid CPA licenses, even if their licenses temporarily are suspended due to misconduct
D) All CPAs who voluntarily join the AICPA
F) All of the above
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A) A primary role in the development of the AICPA Code of Professional Conduct
B) A secondary role in the development of the AICPA Code of Professional Conduct
C) No role in the development of the AICPA Code of Professional Conduct, but it retains the authority to override this code of conduct concerning the behavior of both internal and external auditors performing services relating to the financial activities of regional and local financial institutions
D) No role in the development of the AICPA Code of Professional Conduct
F) A) and B)
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A) Automatically makes a CPA a member of IFAC as well
B) Automatically subjects a CPA to the ethical rules established by the IFAC Code as well
C) Does not entitle a CPA to join IFAC
D) Entitles a CPA to join IFAC upon payment of additional dues
F) A) and B)
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A) Impossible
B) Mandatory
C) Permitted only if an existing IFAC member recommends her
D) Optional but highly recommended as a reputational tool for attracting and retaining clients
F) None of the above
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A
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Certainly, a tax accounting decision that requires a tax return preparer for individual clients to make an ethical choice involves the handling of ambiguous tax situations where the tax law may not be clear or is open to interpretation. One common scenario is the decision on whether to claim a deduction or credit that the tax preparer believes has a legitimate basis but is not unequivocally supported by the tax code or existing regulations.
For example, suppose a tax preparer is working with a client who has a home office and wants to claim a deduction for expenses related to that office. The tax code allows for such deductions under certain conditions, but the specific circumstances of the client's use of the home office may not be entirely clear-cut as to whether it qualifies. The preparer must decide whether to claim the deduction, which could result in a lower tax liability for the client.
The ethical choice here involves a careful consideration of the following:
1. **Due Diligence**: The preparer must exercise due diligence in determining the accuracy of the tax return. This includes investigating the facts and the applicable law to ascertain the likelihood of the home office deduction being allowable.
2. **Honesty and Integrity**: The preparer should be honest and not knowingly prepare a return that claims a deduction or credit that is not warranted. This would be in violation of ethical standards and could potentially lead to penalties for both the preparer and the client.
3. **Professional Judgment**: The preparer must use professional judgment in interpreting the tax laws and applying them to the client's situation. If there is a reasonable basis for the deduction and it is well-documented, the preparer may decide to claim it, but they should also advise the client of the potential for audit and the associated risks.
4. **Client Advisement**: The preparer should fully inform the client of the implications of claiming a questionable deduction, including the possibility of additional taxes, interest, and penalties if the deduction is later disallowed upon review by the tax authorities.
5. **Compliance with Circular 230**: For preparers in the United States, adherence to the Treasury Department's Circular 230, which governs practice before the IRS, is mandatory. Circular 230 outlines the duties and restrictions relating to practice before the IRS, including the need to provide competent representation and the prohibition against endorsing or negotiating any refund check issued to the client.
In making the ethical choice, the tax return preparer must balance the client's desire to minimize tax liability with the legal and ethical obligations to file a correct and compliant tax return. The preparer's decision should ultimately be guided by a commitment to uphold the integrity of the tax system while acting in the best interest of the client within the bounds of the law.
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A) Generally accepted accounting principles
B) Generally accepted auditing standards
C) The AICPA's Code of Professional Conduct
D) All of the above
F) A) and D)
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A) Suspended
B) Revoked
C) Not affected
D) All of the above
F) B) and C)
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D
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A) All accountants, even if they are not licensed by the IFAC itself
B) All professional accountants who work in industry
C) All professional accountants who work in auditing, including both internal and external auditing
D) All professional accountants
F) All of the above
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A) Automatically
B) Only if she also holds a state CPA license as well
C) Only if she is granted membership in the AICPA
D) Only if she performs auditing services as an employee or partner in a CPA firm that is an AICPA member
F) None of the above
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A) Identical to the rules of the IFAC
B) Developed by the international professional accounting community through IFAC and then applied through the IFAC to professional accountants practicing in the United States
C) More rigorous than IFAC's rules due to the mandates imposed by American stock exchange trading rules
D) Never more lenient that the rules of the IFAC
F) A) and B)
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A) How people normally behave
B) How people have been observed to behave, based on one or more empirical studies
C) How people should behave
D) The conduct of accountants that is most prevalent in their profession
F) None of the above
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