Fed Inc Tax Ch 4 Pro Ethics

Front 1

Core ethical values (6)

Back 1

1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship

Front 2

Resolving Ethical Dilemma (6 steps)

Back 2

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

Front 3

Code of Professional Conduct - Principles

Back 3

Ideal standards of ethical conduct stated in philosophical terms. NOT ENFORCEABLE

Front 4

Code of Professional Conduct - Rules of Conduct

Back 4

Minimum standards of ethical conduct stated as specific rules. THEY ARE ENFORCEABLE

Front 5

Code of Professional Conduct - Interpretations of the rules of conduct

Back 5

Interpretations of the rules of conduct by the AICPA Division of Professional Ethics. THEY ARE NOT ENFORCEABLE, but a practioner must justify departure.

Front 6

Code of Professional Conduct - Ethical Rulings

Back 6

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.

Front 7

Ethical Principles (6)

Back 7

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

Front 8

Two rules for Non-Attestation Svcs

Back 8

1. Rule 101 - Independence
2. Rule 203 - Accounting Principles

Front 9

Independence in Fact

Back 9

Exists when the auditor is actually able to maintain an unbiased attitude throughout the audit

Front 10

Independence in Appearance

Back 10

Result of others' interpretations of independence in fact

Front 11

Nonaudit Services Prohibited by SOX and SEC (9)for auditors

Back 11

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

Front 12

Audit Committee

Back 12

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.

Front 13

Audit Partner Rotation

Back 13

SOX, SEC require lead and concurring audit partner to rotate off teh audit engagement after 5 years

Front 14

Ownership interests and Auditing (4)

Back 14

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

Front 15

Rule 101 - Independence

Back 15

A member in public practice shall be indepndent in the performance of professional services as required by the standards

Front 16

Covered members in relation to Rule 101

Back 16

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

Front 17

Rule 301 - Confidential client info

Back 17

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

Front 18

Exceptions to Confidentiality (4)

Back 18

1. Obligations related to technical standards
2. Subpeona or summons and compliance with laws and regs
3. Peer review
4. Response to ethics division

Front 19

Rule 302 - Contingent Fees

Back 19

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

Front 20

Rule 501 - Acts discreditable
(7)

Back 20

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

Front 21

Rule 502 - Advertising and other forms of solicitation

Back 21

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

Front 22

Rule 503 - Commission and referral fees

Back 22

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

Front 23

Rule 505 - Form of organization and name

Back 23

Applies to members in public practice.
Must practice in a form allowed by state and the name can't be misleading

Front 24

Direct financial interest

Back 24

the ownership of stock or other equity shares by a members or their immediate family

Front 25

Independence Standards Board (ISB)

Back 25

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.