Test Your Knowledge of Professional Ethics

INTEGRITY AND OBJECTIVITY 1. Must a member in industry disclose material or relevant information to his or her employer's external accountant even if the accountant did not request such information specifically? Yes No 2. If a member in industry disagrees with his or her supervisor over how to record a transaction that has a material impact on his or her employer's financial statements, should he or she comply with the supervisor's instructions without taking any affirmative action? Yes No 3. Should a member in industry sign a management representation letter if he or she knows that full disclosure was not made to his or her employer's external accountants? Yes No INDEPENDENCE 4. A member is employed by company A. Its sole shareholder owns 100% of company B and 65% of company C. The member was asked by his employer to audit the financial statements of companies B and C. Would the member be independent if he or she did so? Yes No 5. A member is employed in a federated fund-raising organization's internal audit department. Is the member independent to audit organizations that receive funds from his or her employer? Yes No 6. A member employed full or part time on the faculty of a university was asked to audit the financial statements of the Student Senate Fund. Is he or she independent if the university is responsible for the fund's collections and disbursements? Yes No ACCOUNTING PRINCIPLES AND STANDARDS 7. A member in industry represented to external auditors that financial statements remitted were prepared in conformity with generally accepted accounting principles. Is this representation appropriate if the financial statements contain a material departure from an established accounting principle? Yes No ACTS DISCREDITABLE 8. A member was asked to disclose a former employer's trade secret to gain employment with another company. Would the member's disclosure of such information be a violation of the Code of Professional Conduct? Yes No 9. A member in industry discovered his or her employer committed an illegal act. Would the disclosure of such information to the appropriate authorities be a violation of the Code of Professional Conduct? Yes No 10. A member was hired by a corporation to supervise its accounting department in preparing financial statements and presenting them to senior management. Due to considerable time incurred on other financial activities, the member was unable to supervise the accounting staff adequately. It is later discovered the financial statements contain false and misleading information. …