- Multiple Choice: (30pts) _ 1-The profession's ethical standards would most likely be considered to have been violated when a CPA: a- Continued an audit engagement after the commencement of litigation against the CPA alleging excessive fees filed in a stockholder's derivative action b- Represented to a potential client that the CPA's fees were substantially lower than the fees charged by another CPA's for comparable services. C- Issued a report on a financial forecast that omitted a caution regarding achievability. d- Accepted a consultation engagement concerning data processing services for which the auditor lacked independence 2- The concept of materiality would be the least important to an auditor when considering the a- Adequacy of disclosure of a client's illegal act b- Discovery of weaknesses in a client's internal control structure C- Effects of direct financial interest in the client on the CPA's independence d- Decision whether to use positive or negative confirmations of receivables 3- A CPA's license to practice will ordinarily be suspended or revoked automatically for a- Committing an act discreditable to the profession b- Conviction of willful failure to file personal income tax returns - Refusing to respond to an inquiry by the AICPA practice review committee d- Accepting compensation while honoring a subpoena to appear as an expert witness. 4- Which of the following is not an acceptable form of organization for a CPA's practice a- Proprietorship b- LLP or LLC C- Professional Corporation d- General Corporation e- Partnership 5- Which of these would be an Act Discreditable to the profession by you under the Code of Professional Conduct? a- Withholding audit work papers which contain data , to which the client has no other access, from a successor auditor where you have not been paid for the prior year's audit b- Being sued for ordinary negligence by your audit client and losing C- Making a clerical error on your tax client's tax return and not informing the corresponding government agency d- Calling the President a "limelight - seeking coward" e- None of these 6-Which two of the following elements are member-adopted sections of the Code: a- Principles b- Ethical Rulings C- Interpretations d- Rules of Conduct