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2026 Statistics

Key Facts: CPA Ethics and Governance Exam

Official Modules

CPA Program Subject Outline (Fourth Edition)

25%

Top Module Weighting (each)

CPA Program Subject Outline

225 min

Exam Appointment

CPA Australia

Open book

Exam Format

CPA Australia

APES 110

Core Ethics Code

APESB

100

Free Practice Questions

OpenExamPrep

CPA Australia's Ethics and Governance is a compulsory CPA Program subject built on the Fourth edition subject outline, with five modules and official exam weightings: Accounting and society 15%, Ethics 20%, Governance concepts 25%, Governance in practice 25%, and Corporate accountability 15%. The exam is open-book and computer-based, combining case-based multiple-choice questions with extended-response questions in a 225-minute appointment (about 195 minutes working time). CPA Australia does not publish a fixed pass mark or per-subject pass rate, reporting a scaled pass or fail. Module 2 centres on the APES 110 Code of Ethics including its five fundamental principles and conceptual framework of threats and safeguards.

Sample CPA Ethics and Governance Practice Questions

Try these sample questions to test your CPA Ethics and Governance exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1In the CPA Australia Ethics and Governance subject, the foundational obligation distinguishing a profession from a mere occupation is the duty to:

A.Place the good of society and the public interest ahead of personal interests

B.Maximise the fees charged to clients for advisory services

C.Guarantee a minimum return on every audit engagement

D.Restrict membership to protect the income of existing members

Explanation: A defining characteristic of a profession is that members accept an obligation to serve the public interest ahead of their own personal or commercial interests. The privileges and benefits of professional status carry this overriding obligation. The other options describe self-interested or commercial motives that are inconsistent with professional status.

2A 'profession' is generally characterised by all of the following features EXCEPT:

A.A specialised body of knowledge acquired through extended education

B.A guaranteed level of personal wealth for every member

C.A code of ethics governing member conduct

D.An obligation to serve the public interest

Explanation: Professions are characterised by a specialised body of knowledge, a recognised code of ethics, and a commitment to the public interest. A guaranteed level of personal wealth is not a characteristic of a profession; income varies and is not assured by professional status. The remaining options are recognised hallmarks of a profession.

3Under 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?

A.The Australian Securities Exchange (ASX)

B.CPA Australia's membership committee

C.The Auditing and Assurance Standards Board (AUASB)

D.The Australian Competition and Consumer Commission (ACCC)

Explanation: The Auditing and Assurance Standards Board (AUASB) is the independent statutory body that makes auditing standards under the Corporations Act 2001, giving them legal force for company audits. CPA Australia is a professional membership body, not a standard setter. The ASX operates the securities market and the ACCC regulates competition and consumer protection.

4The body responsible for setting accounting standards used in the preparation of financial reports under the Australian Corporations Act 2001 is the:

A.Australian Taxation Office (ATO)

B.Australian Securities and Investments Commission (ASIC)

C.Financial Reporting Council (FRC)

D.Australian Accounting Standards Board (AASB)

Explanation: The Australian Accounting Standards Board (AASB) develops and maintains accounting standards that have legal force under the Corporations Act 2001. ASIC enforces compliance but does not write the standards. The FRC provides broad oversight and strategic direction, and the ATO administers taxation, not financial reporting standards.

5Which regulator is primarily responsible for enforcing the Corporations Act 2001 and overseeing company directors, financial markets and financial services in Australia?

A.The Australian Securities and Investments Commission (ASIC)

B.The Reserve Bank of Australia (RBA)

C.CPA Australia

D.The Australian Prudential Regulation Authority (APRA)

Explanation: ASIC is the corporate, markets and financial services regulator that administers and enforces the Corporations Act 2001, including directors' duties. The RBA conducts monetary policy, APRA prudentially regulates banks and insurers, and CPA Australia is a professional membership body. Only ASIC has the enforcement role described.

6The 'social contract' between the accounting profession and society is best described as the idea that:

A.Members must sign a written contract with every client before providing services

B.Society grants the profession privileges in exchange for the profession serving the public interest

C.Accountants are employees of the government under a statutory contract

D.The profession agrees to limit competition in exchange for higher fees

Explanation: The social contract reflects an implicit exchange: society grants the accounting profession privileges such as self-regulation and status, and in return the profession commits to act in the public interest and maintain high standards. It is not a literal written contract, an employment relationship, or an agreement to restrict competition.

7A 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:

A.Maximise the employer's share price by any means available

B.Always follow management instructions without question

C.Uphold the fundamental principles of the Code while serving the employing organisation lawfully

D.Disregard the Code because it applies only to public practice

Explanation: Professional accountants in business remain bound by the Code's fundamental principles and must comply with them while serving their employer through lawful and ethical means. The Code applies to all members, not just those in public practice. Blindly following instructions or pursuing profit by any means would breach the principles of integrity and professional behaviour.

8The International Federation of Accountants (IFAC) contributes to the global accounting profession primarily by:

A.Issuing professional licences to individual accountants worldwide

B.Directly auditing the financial statements of multinational companies

C.Setting income tax rates for member countries

D.Supporting development of international standards and ethics for the profession

Explanation: IFAC is the global organisation for the accountancy profession and supports the development, adoption and implementation of high-quality international standards, including ethics standards. It does not audit companies, set tax rates, or issue individual licences; those functions belong to firms, governments and national bodies respectively.

9Which of the following best describes the concept of 'professional judgement' as applied by accountants?

A.Applying relevant training, knowledge and experience to make informed decisions in the circumstances

B.Choosing the option that produces the highest fee for the firm

C.Always selecting the most conservative accounting treatment available

D.Following a checklist mechanically without considering context

Explanation: Professional judgement involves applying relevant training, knowledge and experience, within the context provided by accounting and ethical standards, to make informed and defensible decisions. It is not driven by fee maximisation, blanket conservatism, or mechanical checklist-following, each of which ignores the circumstances of the situation.

10CPA Australia members are subject to a disciplinary process. The MOST likely outcome for a member found to have committed a serious breach of the professional conduct requirements is:

A.An automatic criminal conviction imposed by CPA Australia

B.Sanctions ranging up to expulsion from membership

C.Mandatory imprisonment under CPA Australia rules

D.No consequences, because membership bodies cannot discipline members

Explanation: CPA Australia operates a disciplinary framework that can impose sanctions including reprimands, fines, conditions, suspension and ultimately expulsion from membership. It cannot impose criminal convictions or imprisonment, which are matters for the courts. The claim that membership bodies cannot discipline members is incorrect.

About the CPA Ethics and Governance Exam

Ethics and Governance is a compulsory CPA Program subject covering the role of the accounting profession, professional ethics under APES 110, corporate governance concepts and practice, and corporate accountability, examined through case-based multiple-choice and extended-response questions in an open-book computer-based exam.

Assessment

Question count not published by the exam provider

Time Limit

225-minute appointment (approximately 195 minutes working time)

Passing Score

Pass/fail result after scaling; CPA Australia does not publish a fixed pass mark

Exam Fee

Included in the CPA Program subject enrolment fee; amounts vary by region, so check the current CPA Australia fee schedule (CPA Australia)

CPA Ethics and Governance Exam Content Outline

15%

Accounting and society

The nature of the accounting profession, the role of professional accountants, the regulatory and professional framework, public interest, the social contract, IFAC, and self-regulation.

20%

Ethics

Ethical theories, the APES 110 Code of Ethics including Independence Standards, the five fundamental principles, the conceptual framework of threats and safeguards, and ethical decision-making models.

25%

Governance concepts

Corporate governance definitions and theories, agency and stewardship, the corporate form, governance models, ASX Principles, the UK Code, and international and public sector perspectives.

25%

Governance in practice

Board role, independence and structure, audit and other committees, diversity, remuneration, shareholder rights, risk oversight, whistleblowing, data security, and consumer and competition law.

15%

Corporate accountability

Corporate accountability and CSR, the triple bottom line, limitations of financial reporting, integrated and sustainability reporting, ISSB and GRI, legitimacy and stakeholder theory, and climate disclosure.

How to Pass the CPA Ethics and Governance Exam

What You Need to Know

Passing score: Pass/fail result after scaling; CPA Australia does not publish a fixed pass mark
Assessment: Question count not published by the exam provider
Time limit: 225-minute appointment (approximately 195 minutes working time)
Exam fee: Included in the CPA Program subject enrolment fee; amounts vary by region, so check the current CPA Australia fee schedule

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

CPA Ethics and Governance Study Tips from Top Performers

1Allocate study time using the official weightings: Governance concepts and Governance in practice together make up 50% of the exam.

2Master the APES 110 conceptual framework: be able to identify self-interest, self-review, advocacy, familiarity and intimidation threats and apply safeguards.

3Do not rely on the open-book format to learn content during the exam; case-based questions reward genuine understanding and quick application.

4Practise distinguishing governance theories (agency versus stewardship) and reporting theories (legitimacy versus stakeholder).

5Link concepts to Australian and UK frameworks, such as the ASX 'if not, why not' and UK 'comply or explain' approaches.

6Prepare for extended-response questions by practising structured ethical decision-making and applying it to scenarios.

Frequently Asked Questions

What is the format of the CPA Ethics and Governance exam?

CPA Australia states that the Ethics and Governance exam is a computer-based, open-book exam combining multiple-choice questions with extended-response questions. The appointment is about 225 minutes, with roughly 195 minutes of working time.

How many modules are in CPA Ethics and Governance?

The Fourth edition subject outline has five modules: Accounting and society, Ethics, Governance concepts, Governance in practice, and Corporate accountability. Their official exam weightings are 15%, 20%, 25%, 25% and 15% respectively.

Is the CPA Ethics and Governance exam open book?

Yes. The Ethics and Governance exam is open book, but the time limit means candidates should know the material well rather than rely on searching during the exam, especially for case-based questions.

What is APES 110 and why does it matter for this subject?

APES 110 is the Code of Ethics for Professional Accountants (including Independence Standards) issued by the APESB. Module 2 focuses on its five fundamental principles and the conceptual framework of identifying threats and applying safeguards.

What is the passing score for CPA Ethics and Governance?

CPA Australia does not publish a fixed pass mark. Exam results are scaled and reported to candidates as a pass or fail rather than as a raw percentage.

Is Ethics and Governance a compulsory CPA Program subject?

Yes. Ethics and Governance is one of the compulsory subjects in the CPA Program and must be completed to progress toward CPA status.

How much study time should I plan for Ethics and Governance?

CPA Australia recommends substantial self-paced study across the semester. Many candidates report well over 100 hours, and study time should be allocated across the five modules using the official 15/20/25/25/15 weighting.

Does this practice bank match the real exam exactly?

This free bank contains 100 multiple-choice questions aligned to the five official modules to build knowledge. The real exam also includes extended-response questions, which the MCQ practice helps you prepare for conceptually.

100+ Free CPA Ethics and Governance Practice Questions

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