Auditing, Modb/louwers 4E

Front 1

Imperative Principle

Back 1

Directs a decision maker to act according to the requirements of an ethical rule

Front 2

Principle of Utilitarianism

Back 2

Emphasizes examining the consequences of action rather than following some rules.

Front 3

Act-Utilitarianism

Back 3

Attention is on the individual act as it is affected by the specific circumsances of a situation

Front 4

Rule-Utilitarianism

Back 4

Emphasizes the centrality of Rules for Ethical behavior while still maintaining the cirterion of the greatest universal good.

Front 5

Generalization Argument

Back 5

Considers the consequences of a decision made by similar persons acting under similar circumstances. "What would happen if everyone acted that way."

Front 6

Rule 101: Independence, applied to

Back 6

Attestation engagements (audits and reviews)

Front 7

Rule 101: Independence of Financial Relationships

Back 7

No direct finan. relations; no material indirect finan. interests; no material joint venture w/ client, officers, directors or SH; Loans under normal lending practices

Front 8

Rule 101: Independence of Managerial Relationships

Back 8

Cannot act as a promoter, underwriter or equivalent to an employee, no decision making authority

Front 9

Rule 102: Integrity and Objectivity

Back 9

CPAs must remain free of confilicts of interest, not knowingly misrepresent facts, do not subordinate judgments to others, do not knowingly make false or misleading entries in an entity's financial records.

Front 10

Rule 201: General Standards; Rule 202: Compliance w/ Standards; Rule 203: Compliance and Accounting Principles

Back 10

Follow professional standards and interpretations;
Perform only those services that can be completed with professional competence;
Exercise due care;
Adequately plan and supervise all engagements;
Obtain sufficient relevant data to afford a reasonable basis for all conclusions and recommendations.

Front 11

Rule 301: Confidentiality of Client Information, with client concent only, except:

Back 11

To remain in compliance with standards (Rule 203)
If workpapers are subpoenaed by court
As part of a PCAOB peer or quality review of practice
As part of an ethics violation for state board of accountancy investigation

Front 12

Rule 302: Contigent Fees

Back 12

Those fees based on a particular finding or outcome.

Front 13

Rule 501: Acts Discreditable

Back 13

A member shall not commit an act discreditable to the profession

Front 14

Examples of Discreditable Acts:

Back 14

Discrimination
Failure to follow GAGAS on a Governmental audit
Making false or misleading journal entries
Failure to met requirements of a Governmental body, commission, or regulatory body
Failure to file personal income tax return
Disclosure of CPA examination questions or answers

Front 15

Rule 502: Advertising and Solicitation

Back 15

Advertising and solicitation of new clients is permitted.
Advertising: Cannot be “false, misleading, or deceptive”
Cannot create false or unjustified expectations of favorable results
Cannot state ability to influence third parties
Cannot underestimate fees (“low balling”)

Front 16

Rule 503: Commissions and Referral Fees

Back 16

Commissions: recommending the products or services of clients or third parties (non-CPA)
permitted for non-attest, if disclosed
prohibited for attest engagements
Referrals: recommending the services of CPAs
permitted for any engagement, if disclosed

Front 17

Rule 505: Form of Organization and Name

Back 17

A firm can practice in any form permitted by state including:
Limited Liability Partnership (LLP)
Limited Liability Corporation (LLC)
Firm name should not be misleading.
All partners must be CPAs or members of AICPA if included in firm name.