ACCT 3222 Ch. 2 Questions with Correct
Answers
AICPA Code of Professional Conduct
Provides guidance to all members of the AICPA with respect to performance of their
professional responsibilities. Many state boards of accountancy have incorporated this in state
rules so that is applies to all the CPAs in the state. It includes principles, rules of conduct, and
interpretations for AICPA members
Preface Principles
What is the first section in the Code?
AICPA members in public practice (includes conceptual framework)
What is the second section or part 1 of the Code?
AICPA members in business (industry)
What is the third section or part 2 of the Code?
All other AICPA members
What is the fourth section or part 3 of the COde?
Conceptual Framework
The rules in the Code and related interpretations seek to address many situations for members
in the public practice. However, the rules and interpretations cannot address every possible
relationship or circumstance that might arise. Thus, in the absence of a rule or an
interpretation, a CPA should use the ________ _______ to evaluate what to do. The Code
and this reference relate to all work performed by CPAs in public practice, audit
, engagements, tax engagements, accounting services performed for clients, or consulting
engagements
Rule, Interpretation
A CPA should use the conceptual framework in situations where there is not a specific
_______ or _______ that relates to a relationship or circumstances
Identify Threats
What is step 1 in the conceptual framework?
Threats
Relationships or circumstances that could compromise a member's compliance with the rules
Self-Review Threat
- Auditor is put in a position of auditing their own work
- Not independent when it comes to your own work
- Cannot help a client prepare their financials, bookkeeping services, etc
- You are auditing your previous work
- People don't like admitting they were wrong
- Ex. You did the bookkeeping, prepared the financial statements, and designed the
accounting system and then audited it
Advocacy Threat
- Auditor is promoting a client's interest to the point of compromising their own
objectivity/independence
- Ex. Client asking an auditor to lobby for something that they want
- Ex. Can't be client's auditor and attorney
Answers
AICPA Code of Professional Conduct
Provides guidance to all members of the AICPA with respect to performance of their
professional responsibilities. Many state boards of accountancy have incorporated this in state
rules so that is applies to all the CPAs in the state. It includes principles, rules of conduct, and
interpretations for AICPA members
Preface Principles
What is the first section in the Code?
AICPA members in public practice (includes conceptual framework)
What is the second section or part 1 of the Code?
AICPA members in business (industry)
What is the third section or part 2 of the Code?
All other AICPA members
What is the fourth section or part 3 of the COde?
Conceptual Framework
The rules in the Code and related interpretations seek to address many situations for members
in the public practice. However, the rules and interpretations cannot address every possible
relationship or circumstance that might arise. Thus, in the absence of a rule or an
interpretation, a CPA should use the ________ _______ to evaluate what to do. The Code
and this reference relate to all work performed by CPAs in public practice, audit
, engagements, tax engagements, accounting services performed for clients, or consulting
engagements
Rule, Interpretation
A CPA should use the conceptual framework in situations where there is not a specific
_______ or _______ that relates to a relationship or circumstances
Identify Threats
What is step 1 in the conceptual framework?
Threats
Relationships or circumstances that could compromise a member's compliance with the rules
Self-Review Threat
- Auditor is put in a position of auditing their own work
- Not independent when it comes to your own work
- Cannot help a client prepare their financials, bookkeeping services, etc
- You are auditing your previous work
- People don't like admitting they were wrong
- Ex. You did the bookkeeping, prepared the financial statements, and designed the
accounting system and then audited it
Advocacy Threat
- Auditor is promoting a client's interest to the point of compromising their own
objectivity/independence
- Ex. Client asking an auditor to lobby for something that they want
- Ex. Can't be client's auditor and attorney
