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Chapter 3: Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards Chapter 3: Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards Student: ___________________________________________________________________________ 1. When making complex, difficult, and important decisions audit professionals typically do not benefit from a structured approach to their decision-making because they need to remain open-minded. True False 2. Professional judgment involves applying relevant professional knowledge and experience to unique and potentially uncertain facts and circumstances in order to reach a conclusion or make a decision. True False 3. As accounting standards become less rules-based and more principles-based, the role of professional judgement in decision-making will become less important. True False 4. Individual state boards of accountancy and state societies of CPAs have mostly adopted Rules of Conduct established by the AICPA. True False 5. Public confidence is mostly maintained by the public accounting profession through integrity based on personal moral standards and it is reinforced by codes of conduct. True False 6. It is not required for an individual to uphold the code of professional conduct in order to become licensed as a CPA. True False 7. One issue that may threaten independence is that of the time pressure placed on the auditor when an audit is under bid. True False 8. The Sarbanes-Oxley Act of 2002 amends the Securities and Exchange Act of 1934 and places prohibitions on certain consulting services by auditors for their audit clients. True False 9. An auditor of a public client may perform internal audit outsourcing services for a client because such services may overlap with external audit functions. True False 10. An auditor of a public client may assist a client in designing and implementing its enterprise resource planning system in order to ensure that controls over the system exist prior to the audit. True False 11. The SEC is concerned with situations between an auditor and a public company that allow the auditor to act as management of the client. True False 12. The Code of Professional Conduct was adopted by the AICPA membership to provide guidance and rules to only its members in public practice. True False 13. The AICPA Rules of Conduct govern the performance of CPAs in carrying out their public responsibilities. True False 14. Confidentiality is the cornerstone of the auditing profession. True False 15. The AICPA independence rules only apply for attestation clients. True False 16. The AICPA's Code of Professional Conduct defines direct ownership as an investment of one percent or more of a client's organization. ... View Full Document

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