ACCT 402 CH 3 HW fully
solved & updated
What is meant by the term ethical dilemma? Describe an ethical
dilemma that you have faced. - answer An ethical dilemma is a
situation that an individual faces involving a decision about
appropriate behavior. Ethical dilemmas generally involve situations
in which the welfare of one or more other individuals is affected by
the results of one's decision.
What is the basic purpose of a code of ethics for a profession? -
answer The basic purpose of a professional code of ethics is to
provide members of a profession with guidelines for maintaining a
professional attitude and conducting themselves in a manner that
will enhance the stature of their discipline.
List the broad categories of threats to independence included in the
AICPA Conceptual Framework for Independence Standards. - answer
The broad categories of threats to independence include (only titles
required):
(1) Adverse interest—Actions between the public accountant and
the client that are in opposition.
(2) Advocacy—Actions that promote an attest client's interest.
(3) Familiarity—Having a close or longstanding relationship with
client personnel or with individuals who performed non-attest
services.
(4) Management participation—The accountant taking on the role of
client management or otherwise performing management functions.
(5) Self-interest—A potential benefit to the accountant from a
financial interest in, or some other financial relationship with an
attest client.
(6) Self-review—Using as a part of the attest engagement evidence
that was obtained on a non-attest engagement.
, (7) Undue influence—An attest client's management coerces the
accountant or exercises excessive influence over the accountant.
How does the AICPA Code of Professional Conduct relate, if at all, to
Statements on Auditing Standards? - answer The Compliance with
Standards Rule of the AICPA Code of Professional Conduct requires
CPAs to adhere to appropriate professional standards in the
performance of various professional services. In the case of financial
statement audits of nonpublic companies, those standards are
included in the AICPA's Statements on Auditing Standards.
Describe what is meant by the termed "covered member." - answer
A covered member includes:
A. An individual on the attest engagement team;
B. An individual in a position to influence the attest engagement;
C. A partner or manager who provides non-attest services to the
attest client beginning once he or she provides ten hours of non-
attest services to the client within any fiscal year and ending on the
later of the date (1) the firm signs the report on the financial
statements for the fiscal year during which those services were
provided or (2) he or she no longer expects to provide ten or more
hours of non-attest services to the attest client on a recurring basis;
D. A partner in the office in which the lead attest engagement
partner primarily practices in connection with the attest
engagement;
E. A firm, including the firm's employee benefit plans; or
F. An entity whose operating, financial, or accounting policies can be
controlled (as defined by GAAP for consolidation purposes [i.e.,
generally 20%] by any of the individuals or entities described in (a)
through (e) or by two or more such individuals or entities if they act
together.
How do the rules for the audit of public versus nonpublic companies
differ with respect to the independence of a CPA who performs
routine accounting services for a client? - answer The Sarbanes-
Oxley Act of 2002 (as interpreted by SEC regulations) prohibits CPA
solved & updated
What is meant by the term ethical dilemma? Describe an ethical
dilemma that you have faced. - answer An ethical dilemma is a
situation that an individual faces involving a decision about
appropriate behavior. Ethical dilemmas generally involve situations
in which the welfare of one or more other individuals is affected by
the results of one's decision.
What is the basic purpose of a code of ethics for a profession? -
answer The basic purpose of a professional code of ethics is to
provide members of a profession with guidelines for maintaining a
professional attitude and conducting themselves in a manner that
will enhance the stature of their discipline.
List the broad categories of threats to independence included in the
AICPA Conceptual Framework for Independence Standards. - answer
The broad categories of threats to independence include (only titles
required):
(1) Adverse interest—Actions between the public accountant and
the client that are in opposition.
(2) Advocacy—Actions that promote an attest client's interest.
(3) Familiarity—Having a close or longstanding relationship with
client personnel or with individuals who performed non-attest
services.
(4) Management participation—The accountant taking on the role of
client management or otherwise performing management functions.
(5) Self-interest—A potential benefit to the accountant from a
financial interest in, or some other financial relationship with an
attest client.
(6) Self-review—Using as a part of the attest engagement evidence
that was obtained on a non-attest engagement.
, (7) Undue influence—An attest client's management coerces the
accountant or exercises excessive influence over the accountant.
How does the AICPA Code of Professional Conduct relate, if at all, to
Statements on Auditing Standards? - answer The Compliance with
Standards Rule of the AICPA Code of Professional Conduct requires
CPAs to adhere to appropriate professional standards in the
performance of various professional services. In the case of financial
statement audits of nonpublic companies, those standards are
included in the AICPA's Statements on Auditing Standards.
Describe what is meant by the termed "covered member." - answer
A covered member includes:
A. An individual on the attest engagement team;
B. An individual in a position to influence the attest engagement;
C. A partner or manager who provides non-attest services to the
attest client beginning once he or she provides ten hours of non-
attest services to the client within any fiscal year and ending on the
later of the date (1) the firm signs the report on the financial
statements for the fiscal year during which those services were
provided or (2) he or she no longer expects to provide ten or more
hours of non-attest services to the attest client on a recurring basis;
D. A partner in the office in which the lead attest engagement
partner primarily practices in connection with the attest
engagement;
E. A firm, including the firm's employee benefit plans; or
F. An entity whose operating, financial, or accounting policies can be
controlled (as defined by GAAP for consolidation purposes [i.e.,
generally 20%] by any of the individuals or entities described in (a)
through (e) or by two or more such individuals or entities if they act
together.
How do the rules for the audit of public versus nonpublic companies
differ with respect to the independence of a CPA who performs
routine accounting services for a client? - answer The Sarbanes-
Oxley Act of 2002 (as interpreted by SEC regulations) prohibits CPA
