A CPA's Retention of Client Records as a Means of Enforcing

question 65

Multiple Choice

A CPA's retention of client records as a means of enforcing payment of an overdue audit fee is an action that is:

• A)Considered acceptable by the AICPA Code of Professional Conduct.
• B)Ill advised since it would impair the CPA's independence with respect to the client.
• C)Considered discreditable to the profession.
• D)A violation of generally accepted auditing standards.

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Definitions:

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity, leading to potential double taxation on earnings.

Filing Statement

An official document submitted to a regulatory body or institution, detailing certain financial information or changes in ownership.

Tax-Free

Income, dividends, or distributions that are not subject to federal income tax.

Formed Corporation

A business entity that is legally created and registered under state law, offering liability protection to its owners.