The following questions concern possible violations of the AICPA Code of Professional Conduct. Choose the best response.
a. In which one of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining the audit fee?
(1) A fee based on whether the CPA’s report on the client’s financial statements results in the approval of a bank loan.
(2) A fee based on the outcome of a bankruptcy proceeding.
(3) A fee based on the nature of the service rendered and the CPA’s expertise instead of the actual time spent on the engagement.
(4) A fee based on the fee charged by the prior auditor.
b. The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of the client. In which one of the following situations would disclosure by a CPA be in violation of the code?
(2) Disclosing confidential information in compliance with a subpoena issued by a court.
(3) Disclosing confidential information to another accountant interested in purchasing the CPA’s practice.
(4) Disclosing confidential information during an AICPA authorized peer review.
c. A CPA’s retention of client records as a means of enforcing payment of an overdue audit fee is an action that is
(1) not addressed by the AICPA Code of Professional Conduct.
(2) acceptable if sanctioned by the state laws.
(3) prohibited under the AICPA rules of conduct.
(4) a violation of generally accepted auditing standards.
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