This document appears to be a quiz on ethics, legal liability, and audit responsibilities. It contains 17 multiple choice questions covering topics like: the main reasons for unethical behavior; the purpose of an independent audit; maintaining professional skepticism; distinguishing between fraud and constructive fraud; and defining ethical dilemmas. The questions assess understanding of an auditor's duties to exercise due care, maintain independence, and issue opinions on whether financial statements are fairly presented in accordance with professional standards.

1. UOP ACC 491 Week 2 Ethics, Legal Liability, Audit Responsibilities Quiz NEW
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Question 1
One of the main reasons people act unethically is that they choose toact
selfishly.
True
False
Question2
Whichof the following best describes the reasonwhy an independent auditor
reports onfinancial statements?
Poorly designedinternal controls may be inexistence.
A misstatement of account balances may exist andis generally correctedas
the result of the independent auditor's work.
Different interestsmay exist betweenthe company preparing the
statements andthe persons using the statements.
A misappropriationof assets may exist, andit is more likely tobe detected
by independent auditors.
Question3
Because of the risk of material misstatement, anaudit should be planned and
performedwithan attitude of

2. independent integrity.
professional skepticism.
impartial conservatism.
objective judgment.
Question4
Recklessness inthe case of an audit is present if the auditor knewan
adequate audit was not done but still issuedanopinion, eventhough there was
no intent todeceive financial statementusers. This descriptionis the legal term
for:
fraud.
constructive fraud.
gross negligence.
ordinary negligence.
Question5
In the performance of an audit, a CPA:
must exercise constructiveprofessional care inthe performance of their
audit responsibilities.
is legally liable for detecting animmaterial client fraud.
must strictly followGAAP for privately heldclients.
must exercise due professional care inthe performance of their audit
responsibilities.
Question6
The major reasonan independent auditor gathers audit evidence is to
assess control risk.
form an opinion on the financial statements.

3. detect fraud.
evaluate management.
Question7
Ethics are:
a set of moral principles or values.
not formedby life experiences.
always incorporatedinlaws.
neededinthe professions, but is not neededfor society ingeneral.
Question8
If the auditor believes that the financial statements are not fairly statedor is
unable to reach a conclusionbecause of insufficient evidence, the auditor:
shouldnotify regulators of the circumstances.
shouldwithdrawfrom the engagement.
shouldrequest anincrease inaudit fees sothat more resources canbe used
to conduct the audit.
has the responsibility of notifying financial statement usersthroughthe
auditor's report.
shouldnotify regulators of the circumstances.
Question9
The objective of an audit of the financial statements is anexpressionof an
opinion on:
the fairness of the financial statements inall material respects.
the accuracy of the financial statements.
the accuracy of the annual report.
the fairness of the financial statements inall material respects.
the accuracy of the balance sheet and income statement.

4. Question10
________ means that a personacts according to conscience, regardless of the
situation.
Respect
Fairness
Integrity
Caring
Question11
How does the prudent personconcept affect the liability of the auditor?
The prudent person concept states that apersonis responsible for
conducting a job in good faith, integrity, andwithqualifications andattention
that prevents errors. Therefore, the auditor is expectedtoconduct an audit
using such due care that they can guarantee the accuracy of the financial
statements.
The prudent personconcept states that thirdpartiescanconfidently rely on
the independence of the auditors intheir work. However there is liability tothe
auditors if they hide their lack of independence or they misleadthe third
parties.
The prudent personconcept states that apersonis responsible for
conducting a job in good faith and with integrity, but is not infallible. Therefore,
the auditor is expectedtoconduct an audit using due care, but does not claimto
be a guarantor or insurer of financial statements.
The prudent personconcept states that auditors are responsiblefor the
accuracy of the financial statements that are prepared, but only basedon his or
her good faith. Therefore, the auditor must keepup withaccounting standards
to ensure compliance.
Question12

5. What is an ethical dilemma?
Anethical dilemmais a situationthat a personfaces inwhich a decision
must be made about the appropriate behavior.
Anethical dilemmais a synonymfor a legal dilemma.
None of the above
Anethical dilemmain accounting occurs when an error inthe financial
statement has beendiscovered.
Question13
What are the six core ethical values describedby the JosephsonInstitute?
(1) Compassion, (2) Respect, (3) Loyalty, (4) Fairness, (5) Unbiased, and(6)
Trustworthiness
(1) Trustworthiness, (2) Respect, (3) Responsibility, (4) Fairness, (5) Caring,
and (6) Citizenship
(1) Caring, (2) Compassion, (3) Friendliness, (4) Respect, (5) Trustworthiness,
and (6) Morality
(1) Respect, (2) Loyalty, (3) Fairness, (4) Unbiased, (5) Compassion, and(6)
Caring
Question14
Distinguishbetween"fraud"and "constructive fraud."
The difference betweenfraudandconstructive fraudis that fraud can occur
when there is amisstatement due torecklessness of the auditor whereas in
constructive fraudthe intent todeceive willcause extensive harmdamaging the
company.
The difference betweenfraudandconstructive fraudis that in fraud the

6. wrongdoer intends todeceive another party whereas inconstructive fraud
there is a lack of intent todeceive or defraud
The difference betweenfraudandconstructive fraudis that fraud can occur
when there is amisstatement due torecklessness of the auditor whereas in
constructive fraudthe intent todeceive willcause extensive harmdamaging the
company.
The difference betweenfraudandconstructive fraudis that in fraud there is
no intent todeceive or do harm; however, inconstructivefrauda misstatement
is made where there is knowledge of its falsity.
The difference betweenfraudandconstructive fraudis that fraud is the
absence of reasonable care that can be expectedof a personina set of
circumstances;however constructive fraudis alack of eventhe slightest care
that can be expectedof a person.
Question15
Auditors accumulate evidenceto:
reacha conclusionabout the fairness of the financial statements.
satisfy the requirements of the SecuritiesActs of 1933 and1934.
determine if the financial statements are correct.
defendthemselvesinthe event of a lawsuit.
reacha conclusionabout the fairness of the financial statements.
Question16
Whichof the following best describes the reasonwhy an independent auditor
reports onfinancial statements?
Poorly designedinternal controls may be in existence.
Different interestsmay exist betweenthe company preparing the
statements andthe persons using the statements.
A misstatement of account balances may exist andis generally correctedas
the result of the independent auditor's work.

7. A misappropriationof assets may exist, andit is more likely tobe detected
by independent auditors.
Question17
If an auditor fails tofulfill a certainrequirement inthe contract, they may be
guilty of:
constructive fraud.
breachof contract.
criminal neglect.
contract fraud.