Intro: Confidentiality and Ethics

Which principle requires an accountant to avoid personal bias?

• Maintaining client privacy

• Avoiding bias in judgments

• Staying technically current

• Acting honestly in all matters

Answer explanation

Objectivity requires keeping personal interests and bias out of accounting judgments. Integrity covers honesty broadly, not bias avoidance specifically.

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Blooms Level: Remember

A professional conduct code for CPAs applies primarily to whom?

• Payroll clerks only

• Federal tax auditors

• Certified public accountants

• All business owners

Answer explanation

The CPA professional conduct code governs certified public accountants and their members, not all workers who handle financial data.

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Blooms Level: Remember

Sharing a coworker's salary with an outside vendor violates which principle?

• Avoiding bias in judgments

• Protecting private information

• Acting honestly in all matters

• Maintaining technical competence

Answer explanation

Payroll data is private; sharing it outside the organization violates confidentiality. Integrity and objectivity govern honesty and bias, not information disclosure.

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Blooms Level: Apply

How does embezzlement differ from general fraud?

• Fraud requires a trusted position to occur

• Embezzlement involves theft by a trusted insider

• Fraud only applies to external parties

• Embezzlement always involves falsified documents

Answer explanation

Embezzlement is a specific type of fraud where someone steals assets they were entrusted to manage. Fraud is the broader category and does not require an insider relationship.

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Blooms Level: Understand

Which element is part of the fraud triangle?

• Disclosure

• Opportunity

• Negligence

• Incompetence

Answer explanation

The fraud triangle consists of pressure, opportunity, and rationalization. Negligence and incompetence describe errors, not the conditions that enable intentional fraud.

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Blooms Level: Remember

A supervisor pressures an accountant to overstate revenue. The accountant should first:

• Adjust the entry and note the change

• Refuse and report through proper channels

• Comply once and flag it next period

• Ask a coworker to make the change instead

Answer explanation

Ethical standards require refusing requests that misrepresent financial data and escalating the issue. Delegating the change or complying once still produces a fraudulent record.

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Blooms Level: Apply

Which action best protects payroll information confidentiality?

• Storing records on a shared drive

• Printing reports for all employees

• Limiting access to authorized staff only

• Emailing wage data to department heads

Answer explanation

Restricting access to authorized personnel is the core control for payroll confidentiality. Shared drives and broad distribution expose sensitive wage data to unauthorized users.

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Blooms Level: Understand

What is a direct consequence of financial misrepresentation by an accountant?

• Legal penalties and license revocation

• Reassignment to a non-financial role

• Temporary suspension pending internal review

• Mandatory retraining and written warning

Answer explanation

Intentional misrepresentation can result in criminal charges, civil liability, and revocation of an accounting license. Retraining and reassignment apply to performance issues, not deliberate fraud.

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Blooms Level: Remember