Certified Public Accountants (CPA) Ethics Practice Exam

In a situation where a client is insisting on a tax return position that the CPA disagrees with, the most ethical and professional action aligns with option A: finishing the preparation of the return but refusing to sign it. This maintains the integrity of the CPA’s professional judgment while respecting the client’s wishes.

The CPA has a duty to act in accordance with applicable tax laws and regulations. If the CPA has a strong belief that the client’s position is not supportable based on the tax law, preparing and signing the return (as option B suggests) may expose the CPA to potential personal liability and disciplinary action, as it implies that the CPA endorses a position they do not believe is justified.

Option C, withdrawing entirely from the engagement, could be a consideration in some circumstances, especially if the disagreement is significant and irreconcilable. However, rather than walking away, the CPA has the opportunity to communicate clearly with the client about their concerns and advise them on the possible consequences of the position they wish to take.

Option D, which involves preparing the return and seeking legal advice, might be appropriate in certain complex situations, but it is typically seen as unnecessary unless there are unusual legal implications involved. Generally, a clearer practice is for the CPA to complete