1.02 STUDY GUIDE

  1. The AICPA Code of Professional Conduct
  2. Principles – provide ideal standards of professional conduct; not enforceable against AICPA members
  3. Ethical Principles
  4. Responsibilities – exercise sensitive and professional moral judgments
  5. Public Interest – serve the public interest, honor public trust, and demonstrate commitment to the profession
  6. Integrity – perform professional responsibilities with the highest sense of integrity
  7. Objectivity and Independence – be independent in fact and appearance in providing auditing or other attestation services
  8. Due Care – observe technical and ethical standards, improve competence, and perform to the best of your ability
  9. Scope and Nature of Services – follow Code of Professional Conduct in determining scope and nature of services
  10. Rules – represent minimum standards of ethical conduct; enforceable againstAICPA members
  11. Interpretations of Rules of Conduct
  12. Published by AICPA’s Division of Professional Ethics
  13. Used when practitioners have frequent questions
  14. May be used by a practitioner to justify a departure
  15. Ethical Rulings
  16. Published explanations and answers to questions about rules of conduct
  17. Submitted to the AICPA by practitioners and others interested in ethical requirements
  1. Specific Rules of Conduct
  2. Independence – a member in public practice shall be independent in the performance of professional services as required by the standards
  3. Financial interest in client
  4. Immediate family
  5. Former practitioners
  6. Normal lending procedures
  7. Joint relationship with client investor
  8. Joint relationship with client investee
  9. Director, officer, manager, or employee
  10. Litigation between CPA firm and client
  11. Bookkeeping services
  12. Consulting and other nonaudit services
  13. Unpaid fees
  14. Integrity and Objectivity – member shall be free of conflicts of interest, shall not knowingly misrepresent facts or subordinate his or her judgment to others
  15. General Standards – member shall comply with the following standards:
  16. Professional competence – undertake only those professional services that can be completed with professional competence
  17. Due professional care – exercise due professional care in the performance of professional services
  18. Planning and supervision – adequately plan and supervise the performance of professional services
  19. Sufficient relevant data – obtain sufficient, relevant data to provide a reasonable basis for conclusions and recommendations
  20. Compliance with Standards – must comply with the following standards:
  21. Auditing Standards and PCAOB Standards
  22. Statements on Accounting and Review Services
  23. Statements on Standards for Attestation Engagements
  24. Management Consulting Services Standards
  25. Accounting Principles
  26. GAAP is considered to be any statement proclaimed by an authoritative body designated by the AICPA
  27. CPAs must justify any departure from GAAP
  28. Departure from GAAP is permitted IF following GAAP would make statements misleading
  29. Confidential Client Information – may not disclose any confidential client information without the specific consent of the client. Exceptions are:
  30. Subpoenas or summons enforceable by a court order
  31. Review of papers related to an ethics division inquiry
  32. Review of papers related to a peer review
  33. Obligations related to technical standards
  34. Contingent Fees
  35. Fees to be determined upon a particular result
  36. CPAs are forbidden to accept contingent fees for attestation services and tax return preparation
  37. Acts Discreditable
  38. Retaining client records after they have been requested
  39. Discrimination or harassment in employment practices
  40. Noncompliance with standards
  41. Negligence in the preparation of financial statements or reports
  42. Solicitation or disclosure of CPA exam questions and answers
  43. Failure to file a tax return or pay tax liability

  1. Advertising and other forms of solicitation – false, misleading, or deceptive advertisingis prohibited. Examples of unacceptable advertising are:
  2. Creates false or unjustified expectation of favorable results
  3. Implies the ability to influence any court or similar body or official
  4. Client is unaware that there is a likely chance that a stated fee will be substantially increased
  5. Other representations that are likely to cause a reasonable person to misunderstand or be deceived.
  6. Commissions and Referral Fees – compensation paid for recommending a third party’s product or service to a client or recommending a client’s product or service to a third party. Prohibited if the firm also performs:
  7. Audit or review of financial statement for the client
  8. Compilation of financials in which lack of independence is not disclosed and the financials may be used by a third party
  9. Examination of prospective financial information
  10. Form of Organization and Name
  11. Member may practice public accounting only in a form of organization permitted by state law
  12. CPA shall not practice public accounting under a firm name that is misleading
  13. Ownership of CPA firms by non-CPAs is allowed under certain conditions
  14. Firm may not designate itself as a member of the AICPA unless all CPA owners are members of the AICPA
  1. Enforcement of Policies – principally involves the following groups:
  2. State Boards of Accountancy – can revoke CPA certificate of license to practice
  3. AICPA Joint Trial Board – can suspend or expel members from the AICPA; less serious and unintentional violations will normally require only corrective and remedial action