AICPA Final Exam UPDATED ACTUAL Questions and CORRECT Answers
1. 4 parts Ethical principles
Rules of conduct
Interpretations
Ethical rulings
2. Ethical principles Ideal standards of ethical conduct stated in philosophical terms:
Responsibilities
The public interest
Integrity
Objectivity and independence
Due care
Scope and nature of services
Though not enforceable, the burden of proof on CPA for noncompliance
3. rules of conduct Minimum standards of ethical conduct stated as specific rules
(100-500) These are enforceable
Other organizations' rules of conduct can be less or more restrictive than AICPA's:
SEC
TSBPA
For frequent, recurrent questions about a specific rule of conduct
Though not enforceable, a CPA must justify departure
Prepared by AICPA Division of Professional Ethics
4. ethical rulings Explanations to specific important questions about rules of conduct
Based on questions submitted to AICPA by practitioners
Not enforceable, but a CPA must justify departure
5. What Should You Follow whichever is more restrictive
Do When AICPA If you're not sure about an ethics issue, call the TSBPA
Rules of Conduct
Differ from SEC,
TSBPA?
, 6. AICPA Also Re- Previous AICPA rules took a "firm wide" Independence perspective
cently Adopted Intended to modernize rules for auditor independence regarding:
a "Covered Per- Investments in audit clients
son" Indepen- Employment relationships
dence Perspec- Scope of services provided to SEC clients
tive Old rules were out of date and unnecessarily restrictive, given increasing numbers
of dual income families
Firm wide perspective:
Partners could not own any stock in any client company
Managers and below could not own stock of the client if they were in the oflce
doing the audit for the client
For example: Joe Abston, manager in Honolulu oflce, transferred to Dallas oflce
and had to sell Dr Pepper
7. covered persons The audit engagement team members
Persons within the chain of command in relation to the audit team [including
concurring partner, Oflce partner in charge [PIC], regional partner]
Partners and managers providing at least 10 hours of non-audit services to the
audit client [SEC position]
Other partners in the oflce of the engagement partner
The firm and its employee benefit plans
An entity controlled by a covered member
Safe harbor provision for unsolicited gifts or a bequest that would have impaired
independence: SEC 30 days
8. immediate family spouse, spousal equivalent, or dependent
members These relationships are considered ascribed to the covered person
9. independence is impaired if a covered party has a direct financial interest in a client, or a material
rule 101 indirect financial interest in a client
1. 4 parts Ethical principles
Rules of conduct
Interpretations
Ethical rulings
2. Ethical principles Ideal standards of ethical conduct stated in philosophical terms:
Responsibilities
The public interest
Integrity
Objectivity and independence
Due care
Scope and nature of services
Though not enforceable, the burden of proof on CPA for noncompliance
3. rules of conduct Minimum standards of ethical conduct stated as specific rules
(100-500) These are enforceable
Other organizations' rules of conduct can be less or more restrictive than AICPA's:
SEC
TSBPA
For frequent, recurrent questions about a specific rule of conduct
Though not enforceable, a CPA must justify departure
Prepared by AICPA Division of Professional Ethics
4. ethical rulings Explanations to specific important questions about rules of conduct
Based on questions submitted to AICPA by practitioners
Not enforceable, but a CPA must justify departure
5. What Should You Follow whichever is more restrictive
Do When AICPA If you're not sure about an ethics issue, call the TSBPA
Rules of Conduct
Differ from SEC,
TSBPA?
, 6. AICPA Also Re- Previous AICPA rules took a "firm wide" Independence perspective
cently Adopted Intended to modernize rules for auditor independence regarding:
a "Covered Per- Investments in audit clients
son" Indepen- Employment relationships
dence Perspec- Scope of services provided to SEC clients
tive Old rules were out of date and unnecessarily restrictive, given increasing numbers
of dual income families
Firm wide perspective:
Partners could not own any stock in any client company
Managers and below could not own stock of the client if they were in the oflce
doing the audit for the client
For example: Joe Abston, manager in Honolulu oflce, transferred to Dallas oflce
and had to sell Dr Pepper
7. covered persons The audit engagement team members
Persons within the chain of command in relation to the audit team [including
concurring partner, Oflce partner in charge [PIC], regional partner]
Partners and managers providing at least 10 hours of non-audit services to the
audit client [SEC position]
Other partners in the oflce of the engagement partner
The firm and its employee benefit plans
An entity controlled by a covered member
Safe harbor provision for unsolicited gifts or a bequest that would have impaired
independence: SEC 30 days
8. immediate family spouse, spousal equivalent, or dependent
members These relationships are considered ascribed to the covered person
9. independence is impaired if a covered party has a direct financial interest in a client, or a material
rule 101 indirect financial interest in a client
