1S. A primary purpose for establishing a code of ethical conduct within a professional organization is to: Require members of the profession to exhibit loyalty in all matters (a) (b) (c) (d) pertaining to the affairs of their organization. Demonstrate acceptance of responsibility to the interests of those served by the profession. Reduce the likelihood that members of the profession will be sued for substandard work. Ensure that all members of the profession perform at approximately the same level of competence 16. According to the profession's ethical standards, a CPA would be considered independent in which of the following instances? (a) The CPA belongs to a country club client in which membership (b) requires the acquisition of a pro rata share of cquity. The CPA has a material direct financial interest in a client but transfers the interest into a blind trust. The CPA agrees to indemnify the client against losses from client acts. The CPA owns an office building, and the mortgage on the building is guaranteed by a client. (c) (d) 17. In the Hochfelder case, all of the following were factors in the case except: (a) (b) (c) (d) The Securities Exchange Act of 1934. Scienter. Violation of federal criminal statutes. Negligence. Which of the following is least likely to be an example of ordinary negligence? (a) The auditor misinterprets a transaction because he/she did not read 18. (b) (c) (d) the invoice carefully The auditor misreads an invoice and fails to note that an expenditure charged to an expense account should have been capitalized. The auditor omits the observation of the client's inventory that is material. The auditor reads the minutes of the meetings of the client's board of directors and fails to note an important property acquisition approved by them