CPA Program — Ethics and Governance

In the CPA Australia Ethics and Governance subject, the foundational obligation distinguishing a profession from a mere occupation is the duty to:

• APut the good of society ahead of personal interests
• BMaximise the fees charged to clients for advisory services
• CGuarantee a minimum financial return on every engagement accepted
• DRestrict membership so that existing members' incomes are protected

A 'profession' is generally characterised by all of the following features EXCEPT:

• AA specialised body of knowledge acquired through extended education
• BA guaranteed level of personal wealth for every member
• CA code of ethics governing member conduct
• DAn obligation to serve the public interest

Under the regulatory framework governing the Australian accounting profession, which body is responsible for setting auditing standards that have the force of law for audits conducted under the Corporations Act 2001?

• AThe Australian Securities Exchange (ASX)
• BCPA Australia's membership committee
• CThe Auditing and Assurance Standards Board (AUASB)
• DThe Australian Competition and Consumer Commission (ACCC)

The body responsible for setting accounting standards used in the preparation of financial reports under the Australian Corporations Act 2001 is the:

• AAustralian Taxation Office (ATO)
• BAustralian Securities and Investments Commission (ASIC)
• CFinancial Reporting Council (FRC)
• DAustralian Accounting Standards Board (AASB)

Which regulator is primarily responsible for enforcing the Corporations Act 2001 and overseeing company directors, financial markets and financial services in Australia?

• AThe Australian Securities and Investments Commission (ASIC)
• BThe Reserve Bank of Australia (RBA)
• CThe Australian Charities and Not-for-profits Commission (ACNC)
• DThe Australian Prudential Regulation Authority (APRA)

The 'social contract' between the accounting profession and society is best described as the idea that:

• AMembers must sign a written contract with every client before providing services
• BSociety grants the profession privileges in return for public-interest service
• CAccountants are employees of the government under a statutory contract
• DThe profession agrees to limit competition in exchange for higher fees

A CPA Australia member working in business (as opposed to public practice) is sometimes described as a 'professional accountant in business'. The member's primary professional obligation is to:

• AMaximise the employer's share price by whatever means are available
• BFollow management's instructions without questioning their legality
• CUphold the Code's fundamental principles while serving the employer
• DDisregard the Code, which applies only to members in public practice

The International Federation of Accountants (IFAC) contributes to the global accounting profession primarily by:

• AIssuing professional practising certificates to individual accountants
• BAuditing the financial statements of large multinational companies
• CSetting income tax rates that apply across its member jurisdictions
• DSupporting development of international standards and ethics

Which of the following best describes the concept of 'professional judgement' as applied by accountants?

• AApplying training, knowledge and experience to the circumstances
• BChoosing the treatment that produces the highest fee for the firm
• CAlways selecting the most conservative treatment available
• DFollowing a standard checklist without considering the context

CPA Australia members are subject to a disciplinary process. The outcome available against a member found to have committed a serious breach of the professional conduct requirements is:

• AAutomatic loss of any ASIC auditor registration
• BSanctions ranging up to expulsion from membership
• CA fine imposed by ASIC at CPA Australia's request
• DA private warning that is never made public

The 'expectation gap' in the context of the accounting and auditing profession refers to:

• AThe difference between accounting standards in two jurisdictions
• BThe gap between an entity's budgeted and actual profit for a period
• CWhat the public believes auditors do versus their actual duties
• DThe time lag between the balance date and the audit report date

Self-regulation of the accounting profession is generally justified on the basis that:

• AIt removes the need for any government regulation of companies
• BIt allows the profession to avoid all external oversight and accountability
• CIt guarantees that no member of the profession will ever act unethically
• DMembers have the expertise to set and monitor appropriate standards

A key reason the accounting profession emphasises maintaining society's 'confidence and trust' is that:

• AThe value of its work depends on stakeholders' reliance
• BTrust allows members to charge unlimited fees without scrutiny
• CConfidence removes the need to comply with accounting standards
• DTrust permits the profession to leave conflicts of interest unmanaged

Under the Australian financial reporting framework, the Financial Reporting Council (FRC) primarily provides:

• ADetailed drafting of each individual accounting standard
• BStrategic oversight of the standard-setting process
• CEnforcement of directors' duties under the Corporations Act
• DAudits of the financial statements of listed companies

The idea that accountants serve a wide range of stakeholders, and not shareholders alone, follows most directly from:

• AA prohibition on professional accountants working in industry
• BA requirement that companies maximise dividends each year
• CThe profession's obligation to act in the public interest
• DA rule that only listed companies are required to engage accountants

Under APES 110 Code of Ethics for Professional Accountants (including Independence Standards), which of the following is NOT one of the five fundamental principles?

• AProfessional behaviour
• BIntegrity
• CObjectivity
• DProfitability

The fundamental principle in APES 110 requiring a member to be straightforward and honest in all professional and business relationships is:

• AIntegrity
• BConfidentiality
• CProfessional competence and due care
• DObjectivity

Under the conceptual framework approach in APES 110, a member who identifies a threat to compliance with a fundamental principle should FIRST:

• AImmediately resign from the engagement in all cases
• BEvaluate whether the threat is at an acceptable level
• CApply safeguards without first evaluating the threat's significance
• DRecord the threat in the file and take no further action