AICPA Code Of Professional Conduct Rules – Q&A
AICPA Code of Professional Conduct: Principles Correct Ans - -
Responsibilities: exercise sensitive professional and moral judgment
-The Public Interest: honor the public trust
-Integrity: perform responsibilities with highest sense of integrity
-Objectivity and Independence: impartial, unbiased, independent of fact
and appearance
-Due Care: diligence, competence, thorough, prompt
-Scope and Nature of Services: observe the principles when considering the
scope and nature of services provided
who defines independence for public companies? Correct Ans - -A
member in public practice shall be independent in the performance of
professional services as required by standards promulgated by bodies
designated by Council.
Rule 101: Independence Correct Ans - -applies to attestation
engagements (audits and reviews)
-no direct financial interest
-no material indirect financial interests
-no material joint venture with clients, officers, or shareholders
-cannot act as a promoter, underwriter, or equivalent to an employee (no
decison making)
rule 101: independence of family Correct Ans - -immediate family
members have the same restrictions as the member
-a close relative (all immediate family members and parents, siblings, etc.)
cannot hold ownership or control of an audit client and no employment
with a client in an audit sensitive position
Rule 102: Integrity and Objectivity Correct Ans - -CPAs must
remain free of conflicts of interest
-Do not knowingly misrepresent facts.
-Do not subordinate judgments to others.
-Do not knowingly make false or misleading entries in an entity's financial
records
, -If disagreements exist concerning the preparation of financial statements
or the recording of transactions, accept the supervisor's position if
acceptable.
-Report to higher level if supervisor's position is not acceptable.
-Consider resigning if upper management will not take appropriate action.
Rule 201: General Standards Correct Ans - 1. professional
competence
2. due professional care
3. planning and supervision
4. sufficient relevant data
Rule 203: Compliance with Accounting Principles Correct Ans - -
Must not state that financial statements are in compliance with GAAP, or
state that you are not aware of any material departures from GAAP if you
are aware of such.
Rule 301: Confidential Client Information Correct Ans - - A CPA
cannot disclose confidential information without client's consent
EXCEPT:
-to remain in compliance with standards
-if work papers are subpoenaed by court
-as part of PCAOB peer or quality review of practice
-as part of an ethics violation for a state board of accountancy investigation
Rule 302: Contingent Fees Correct Ans - -A contingent fee is a fee
based on a particular finding or outcome
-not permitted for attest engagements (audit and review)
-not contingent if: fixed by courts
based on hours worked or services provided
-allowed for non-attest engagements (tax, consulting, litigation, support)
Rule 501: Acts Discreditable Correct Ans - -A member shall not
commit an act discreditable to the profession
EX:
-discrimination
-failure to follow GAGAS on gov't audit
-making false or misleading JE
AICPA Code of Professional Conduct: Principles Correct Ans - -
Responsibilities: exercise sensitive professional and moral judgment
-The Public Interest: honor the public trust
-Integrity: perform responsibilities with highest sense of integrity
-Objectivity and Independence: impartial, unbiased, independent of fact
and appearance
-Due Care: diligence, competence, thorough, prompt
-Scope and Nature of Services: observe the principles when considering the
scope and nature of services provided
who defines independence for public companies? Correct Ans - -A
member in public practice shall be independent in the performance of
professional services as required by standards promulgated by bodies
designated by Council.
Rule 101: Independence Correct Ans - -applies to attestation
engagements (audits and reviews)
-no direct financial interest
-no material indirect financial interests
-no material joint venture with clients, officers, or shareholders
-cannot act as a promoter, underwriter, or equivalent to an employee (no
decison making)
rule 101: independence of family Correct Ans - -immediate family
members have the same restrictions as the member
-a close relative (all immediate family members and parents, siblings, etc.)
cannot hold ownership or control of an audit client and no employment
with a client in an audit sensitive position
Rule 102: Integrity and Objectivity Correct Ans - -CPAs must
remain free of conflicts of interest
-Do not knowingly misrepresent facts.
-Do not subordinate judgments to others.
-Do not knowingly make false or misleading entries in an entity's financial
records
, -If disagreements exist concerning the preparation of financial statements
or the recording of transactions, accept the supervisor's position if
acceptable.
-Report to higher level if supervisor's position is not acceptable.
-Consider resigning if upper management will not take appropriate action.
Rule 201: General Standards Correct Ans - 1. professional
competence
2. due professional care
3. planning and supervision
4. sufficient relevant data
Rule 203: Compliance with Accounting Principles Correct Ans - -
Must not state that financial statements are in compliance with GAAP, or
state that you are not aware of any material departures from GAAP if you
are aware of such.
Rule 301: Confidential Client Information Correct Ans - - A CPA
cannot disclose confidential information without client's consent
EXCEPT:
-to remain in compliance with standards
-if work papers are subpoenaed by court
-as part of PCAOB peer or quality review of practice
-as part of an ethics violation for a state board of accountancy investigation
Rule 302: Contingent Fees Correct Ans - -A contingent fee is a fee
based on a particular finding or outcome
-not permitted for attest engagements (audit and review)
-not contingent if: fixed by courts
based on hours worked or services provided
-allowed for non-attest engagements (tax, consulting, litigation, support)
Rule 501: Acts Discreditable Correct Ans - -A member shall not
commit an act discreditable to the profession
EX:
-discrimination
-failure to follow GAGAS on gov't audit
-making false or misleading JE
