Blaw Test 2 Ch. 6

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The Principles of the Code … express the profession’s recognition of its responsibilities to the public, to clients, and to colleagues… The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.”

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AICPA Code

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AICPA Code six principles

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Responsibilities
In carrying out your professional responsibilities, you should exercise sensitive professional and moral judgment.
The Public Interest
You should act in a way that will serve the public interest, honor the public trust, and demonstrate your commitment to professionalism.
Integrity
To maintain and broaden public confidence, you should perform all professional responsibilities with the highest sense of integrity.
Objectivity and Independence
You should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.
Due Care
You should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of your ability.
Scope and Nature of Services
A member in public practice should observe the Principles of the Code in determining the scope and nature of services to be provided.

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Rules of conduct

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Rule 101: Independence
Rule 102: Integrity and Objectivity
Rule 201: General Standards
Rule 301: Confidentiality
Rule 302: Contingent Fees
Rule 501: Acts Discreditable

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is a state of mind, a quality that lends value to a member’s services. It is a distinguishing feature of the profession. The principle of objectivity imposes the obligation to be impartial, intellectually honest, and free of conflicts of interest.

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Objectivity

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Interpretations of Rule 101 state that Independence is impaired if

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A covered member had a direct financial interest or material indirect financial interest in the client.

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When a covered member invests in a third party that invests in a client.

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material indirect financial interest (“materiality” test is applied ONLY in cases of indirect financial interests)

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any monetary interest in a client.

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direct financial interest

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Any individual on the attest engagement team or who is able to influence management,
Any partner or manager who provides at least 10 hours of nonattest services to a client,
Any partner in the office where the lead engagement partner primarily practices.
Spouse (or Spousal Equivalent)
Dependents, including but not limited to:
Dependent Children and
One’s Parents, IF they are also dependents.
Other “Close Relatives”

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covered member

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those for whom you conduct a financial statement audit or review or other attestation work.

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client (By client we mean attest clients) (attest means to bear witness to; certify; declare to be correct, true, or genuine; declare the truth of, in words or writing, especially affirm in an official capacity: to attest the truth of a statement.
2. to give proof or evidence of; manifest: His works attest his industry.
3. to put on oath.)