7. In which of the following circumstances would a CPA who audits XM Corporation lack independence? a. The CPA has a home mortgage from XM, which is a saving s and loan organization. b. The CPA reduced XM’s usual audit fee by 40% because XM financial condition was unfavorable. c. The CPA and XM president are both on the board of directors of COD Согрoration. d. The CPA and XM president each owns 25% of FOB Corporation, a closely held company. 3. Which of the following statements best describes why the CPA profession has deemed it essential to promulgate a code of ethics? a. An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession. b. A distinguishing mark of a profession is its acceptance of responsibility to the public.
7. In which of the following circumstances would a CPA who audits XM Corporation lack independence? a. The CPA has a home mortgage from XM, which is a saving s and loan organization. b. The CPA reduced XM’s usual audit fee by 40% because XM financial condition was unfavorable. c. The CPA and XM president are both on the board of directors of COD Согрoration. d. The CPA and XM president each owns 25% of FOB Corporation, a closely held company. 3. Which of the following statements best describes why the CPA profession has deemed it essential to promulgate a code of ethics? a. An essential means of self-protection for the profession is the establishment of flexible ethical standards by the profession. b. A distinguishing mark of a profession is its acceptance of responsibility to the public.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:7. In which of the following circumstances would a CPA who audits XM
Corporation lack independence?
a. The CPA has a home mortgage_from XM, which is a saving s and loan
organization.
b. The CPA reduced XM's usual audit fee by 40% because XM financial
condition was unfavorable.
c. The CPA and XM president are both on the board of directors of COD
Согрoration.
d. The CPA and XM president each owns 25% of FOB Corporation, a
closely held company.
8. Which of the following statements best describes why the CPA profession has
deemed it essential to promulgate a code of ethics?
a. An essential means of self-protection for the profession is the
of flexible ethical standards by the profession.
b. A distinguishing mark of a profession is its acceptance of responsibility
to the public.
stablishment
CHAPTER 3 CODE OF PROFESSIONAL ETHICS
53
that stress primarily a responsibility to clients and colleagues.
d. A requirement of most laws calls for the profession to establish code of
ethics.
11iched 1.
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