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25 Cards in this Set

  • Front
  • Back
Core ethical values (6)
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
Resolving Ethical Dilemma (6 steps)
1. Obtain relevant facts
2. ID the ethical issues from the facts
3. Determine who is affectecd by the outcome of the dilemma and how each person or group is affected
4. ID the alternative available to the person who must resolve the dilemma
5. ID the likely consequence of each alternative
6. Decide on an appropriate action
Code of Professional Conduct - Principles
Ideal standards of ethical conduct stated in philosophical terms. NOT ENFORCEABLE
Code of Professional Conduct - Rules of Conduct
Minimum standards of ethical conduct stated as specific rules. THEY ARE ENFORCEABLE
Code of Professional Conduct - Interpretations of the rules of conduct
Interpretations of the rules of conduct by the AICPA Division of Professional Ethics. THEY ARE NOT ENFORCEABLE, but a practioner must justify departure.
Code of Professional Conduct - Ethical Rulings
Published explanations and answers to questions about the rules of condut submitted to the AICPA by practioners and others interested in ethical requirements. THEY ARE NOT ENFORCEABLE, but a practioner must justify departure.
Ethical Principles (6)
1. Responsibilities-excercise profesional and moral judgements
2. Public Interest
3. Integrity
4. Objectivity and Independence
5. Due Care
6. Scope and Nature of Svcs - observe principles of the Code of Professional Conduct
Two rules for Non-Attestation Svcs
1. Rule 101 - Independence
2. Rule 203 - Accounting Principles
Independence in Fact
Exists when the auditor is actually able to maintain an unbiased attitude throughout the audit
Independence in Appearance
Result of others' interpretations of independence in fact
Nonaudit Services Prohibited by SOX and SEC (9)for auditors
1. bookkeeping and other acctg svcs
2. finandial info systems design and implementation
3. appraisal or valuation svcs
4. actuarial svcs
5. internal audit outsourcing
6. mgmt or HR functions
7. broker or dealer or investment adviser or investment banker svcs
8. legal and exper svcs unrelated to the audit
9. any other svc that the PCAOB determines by regulation impermissable
Audit Committee
selected number of members of a company's board whose responsibilites include helping auditors remain independent of mgmt.
Must be independent.
Public Co - responsible for appointment, compensation and oversight of the work of te auditor.
Audit Partner Rotation
SOX, SEC require lead and concurring audit partner to rotate off teh audit engagement after 5 years
Ownership interests and Auditing (4)
SEC prohibit ownership of a) members of audit engagement team b) those in a position to influence the audit engagement in the firm chain of command c) partners and managers who provide more than 10 hrs of nonaudit svcs to the client d) partners in te office of the partner prmarily responsible for the audit engagement
Rule 101 - Independence
A member in public practice shall be indepndent in the performance of professional services as required by the standards
Covered members in relation to Rule 101
Covers those in a postion to influence an attest engagement.
Example
1. individuals on the attest engagement team
2. supervisor or evaluator of audit
3. partner or manager who provides non attestation svcs
4. partner in office of partner responsible for attest engagement
5. firm and it's employee benefit plans
6. entity that can be controlled by any of the covered members listed above or by two or more of the covered individuals or entities operating togethe
Rule 301 - Confidential client info
Applies to members in public practice.
Member shouldn't disclose any confidential client info without the specific consent of the client, except for the four situations in 301
Exceptions to Confidentiality (4)
1. Obligations related to technical standards
2. Subpeona or summons and compliance with laws and regs
3. Peer review
4. Response to ethics division
Rule 302 - Contingent Fees
Applies to members in public practice
Member can't perform for contingent fee if member also performs the audit, review or compilations of FS.
Also, member shouldn't prepare tax return for contingent fee
Rule 501 - Acts discreditable
(7)
Applies to all members.
1. retention of clients records
2. discrimination and harrassment in employment practices
3. Must follow standards on gov't audits and requirements of gov't bodies and agencies
4. Negligence in prep of FS or records
5. Failure to follow requirement of gov't bodies
6. Solicitation or disclosure of CPA exam questions or answers
7. Failure to file tax return or pay tax liability
Rule 502 - Advertising and other forms of solicitation
Applies to members in public practice.
Shouldn't seek clients by advertising in a fasle, misleading or deceptive way, or thru coecercion, overreaching or harrassing
Rule 503 - Commission and referral fees
Applies to members in public practice.
Member can't receive commission or referral fee if they also do the audit, review of FS, or prospective stmts for client. Any fees they get that aren't prohibited must be disclosed
Rule 505 - Form of organization and name
Applies to members in public practice.
Must practice in a form allowed by state and the name can't be misleading
Direct financial interest
the ownership of stock or other equity shares by a members or their immediate family
Independence Standards Board (ISB)
an autonomous private sector body est under an agreement between the SEC and the ACIPA to provide a conceptual framework for the independence issues related to audits of public co's.