1. Sarah, the controller of a large beverage supplier, supervises two employees. Her boss,
Vladimir, instructs her to increase the company's inventory balance for an amount that is
material to the financial statements
...
1. Sarah, the controller of a large beverage supplier, supervises two employees. Her boss,
Vladimir, instructs her to increase the company's inventory balance for an amount that is
material to the financial statements by crediting several small "miscellaneous" expense
accounts. She does not understand why he wants her to make these entries but immediately
directs one of her staff to make them because she has been instructed to do so. Which of the
following statements best describes Sarah's actions?
2. Sarah failed to evaluate a potential ethical issue.
3. SarahfailedtoreferthemattertotheAICPAethicshotline.
4. Sarah failed to ensure that her staff was competent to make the entries.
5. Sarahfailedtoconsidertherulesofotherregulators.
6. Josie, an accounting supervisor in Monk & Sons Realty, instructs Maria, her employee, to
make certain accounting entries in the company's books that will increase revenue. Maria
researches the matter, confirming her concern that these entries would overstate revenue, and
informs Josie that recognizing revenue in this manner would be premature and not consistent
with generally accepted accounting principles (GAAP) but Josie disagrees and insists that
Maria record the entries. The amount of revenue is material to Monk's financial statements.
According to the AICPA rules, what should Maria do first?
7. Resign her position quietly.
8. Report the matter to the senior partner in the firm.
9. Take out a professional liability policy.
10. Discuss her concerns with Josie's boss.
1. The AICPA Code of Professional Conduct includes the following sections:
2. Preface, rules, and interpretations applicable to members in tax practice and members in
business.
3. Preface, rules, and interpretations applicable to members in public practice and members
n business.
4. Preface, rules, and interpretations applicable to members in tax practice and members in
audit practice.
5. Preface, rules, and interpretations applicable to members in audit practice and members
in business.
1. Which of the following s
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