ExpertMedium1 markMultiple Choice
CPA · Question 05 · Area I: Ethics & General Principles
An auditor is evaluating the 'integrity' principle of the AICPA Code of Professional Conduct. Which of the following situations most clearly represents a violation of the integrity principle, rather than just the objectivity or due care principles?
An auditor is evaluating the 'integrity' principle of the AICPA Code of Professional Conduct. Which of the following situations most clearly represents a violation of the integrity principle, rather than just the objectivity or due care principles?
Answer options:
A.
The auditor inadvertently fails to detect a material error due to poor sampling technique.
B.
The auditor accepts a gift from a client that is considered 'clearly insignificant'.
C.
The auditor knowingly signs a report on financial statements that contain a material false statement.
D.
The auditor subordinates their judgment to the client's preference on an accounting estimate.
How to approach this question
Differentiate between the fundamental principles: Integrity (honesty, not knowingly misrepresenting), Objectivity (impartiality), Due Care (competence), and Confidentiality.
Full Answer
C.The auditor knowingly signs a report on financial statements that contain a material false statement.✓ Correct
The Integrity principle mandates that a member shall be honest and candid. Knowingly making false or misleading entries, or signing a report that is materially false, is a breach of integrity. Inadvertent errors relate to Due Care; subordination of judgment relates to Objectivity.
Common mistakes
Confusing Integrity with Objectivity or Due Care.
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