AICPA Ethics Exam 100% ACCURATE GRADE A+ GUARANTEED

Ethical Decision Making Model helps you actively work through gray area and choose the best possible solution to an ethical dilema Step 1: Recognize the ethical issue Step 2: Gather the critical facts Step 3: Identify the stakeholders Step 4: Consider your alternatives Step 5: Consider the effect on stakeholders Step 6: Consider your comfort level Step 7: Consider rules, regulations and laws Step 8: Make a decision Step 9: Document your efforts Step 10: Evaluate the outcome Step 1 Recognize the ethical issue Step 2 Gather the critical facts -you may not have all the facts, but you need the key ones (material) Step 3 Identify the stakeholders -who is affected by your decisions/actions -consider as many as possible Step 4 Consider your alternatives -approaches you could take to address this matter and resolve the ethical conflict Step 5 Consider the effect on stakeholders -effect of each alternative Step 6 Consider your comfort level -how comfortable are you with each option -how would you feel if you have to discuss your decision in public Step 7 Consider rules, regulations, and laws -rules set by AICPA, state accountancy board, state CPA society Step 8 Make a decision -take the time you need -discuss with colleague, gain perspectives, counsel, don't be hasty Step 9 Document your efforts -your understanding of the facts -who you consulted with and their professional affiliations -your decision Step 10 Evaluate the outcome -would you have done anything differently Professional & Regulatory Bodies set ethics standards and rules for members of the accounting profession State CPA licensing boards AICPA SEC PCABO IFAC IRS GAO DOL others State CPA Licensing Boards issues CPA licesnes and oversee ethical conduct of jurisdiction AICPA American Institute of Certified Public Accountants national professional organization for all CPAs; work with state CPA societies -PEEC: Professional Ethics Executive Committee promulgates and enforces ethics and independence rules that apply to all members SEC Securities and Exchange Commission federal agency establishes and enforces accounting and auditing policies PCAOB Public Company Accounting Oversight Board establishes auditing, attestation, quality control, ethics and independence standards for public company auditors IFAC International Federation of Accountants develop standards for auditing, education, ethics, and public sector financial reporting in the accounting profession globally promotes good ethical practices IRS Internal Revenue Service government agency authorizes the Secretary of the Treasury to set rules and regulations necessary to enforce the UT tax laws Treasury Dept Circular 230 governs federal tax practice before the IRS IRS Office of Professional Responsibility (OPR) enforces these regulations GAO US Government Accountability Office issues ethics and independence rules that apply to engagements performed under GAGAS DOL Department of Labor interpretive bulletin on independence Code of Conduct -assume responsibilities above and beyond those required by law -act honorably, even at the sacrifice of personal advantage CPAs must follow the rules and standards promulgated by which bodies Their state CPA licensing board 3 Areas of AICPA's PEEC members in public practice members in business members in neither category (retired or between jobs) ______________________________________________________________________________ Membership in AICPA is voluntary - member assumes obligations Profession has responsibility to the public, to clients, and to colleagues Guide members in the performance of their professional responsibilities American Institute of Certified Public Accountants Professional Ethics Executive Committee (PEEC) -maintains the AICPA's Code of Professional Conduct -framework approach: provides a methodology for assessing facts and circumstances not contemplated under the rules _______________________________________________________________________________ -3 frameworks 2 for members in public practice (independence and all other areas) 1 for members in business ______________________________________________________________________________ Preface Part 1 for members in public practice (independence and all other areas) Part 2 for member in business Part 3 for all other members Glossary 6 Principles of Professional Conduct Responsibilities The Public Interest Integrity Objectivity and Independence Due Care Scope and Nature of Services 1. Responsibilities In carrying out your professional responsibilities, you should exercise sensitive professional and moral judgment 2. The Public Interest You should act in a way that will serve the public interest, honor the public trust, and demonstrate your commitment to professionalism 3. Integrity To maintain and broaden public confidence, you should perform all professional responsibilities with the highest sense of integrity 4. Objectivity and Independence You should maintain objectivity and be free of conflicts of interest in discharging your professional duties. If you work for a public accounting firm that provides audit and other attestation services, you should be independent in fact and in appearance. 5. Due Care You should observe the profession's technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of your ability 6. Scope and Nature of Services As a member in public practice, you should observe the principles of the Code of Professional Conduct in determining the scope and nature of services to be performed Rules for Members in Public Practice Integrity and Objectivity Independence General Standards Compliance with Standards Accounting Principles Acts Discreditable Fees and Other Types of Remuneration Advertising and Other Forms of Solicitation Confidential Information Form of Organization and Name Rules for Members in Business Integrity and Objectivity General Standards Compliance with Standards Accounting Principles Acts Discreditable Other Members Acts Discreditable Interpretations The code provides interpretations of each of the rules of conduct. Provides guidelines to members on scope and application. Members are required to apply these interpretations unless they can justify noncompliance. Integrity and Objectivity - maintain objectivity and integrity - be free of conflicts of interest - shall not knowingly misrepresent facts or subordinate his or her judgment to others Integrity: honest and candid; measured in terms of what is right and just Helping Hands Case Study -an organization that is under financial duress may have strong incentives to "bend the rules" -plan was to "temporarily be relieved of debt" until financial statements can be made and appear good ("goodwill gesture"/legal) It's legal, but is it ethical? Objections: -manipulating financial statements is a violation of "integrity and objectivity rule" regarding false and misleading information -material changes to financial statements are a form of deceit -changes could affect user's decision about whether to continue donations -making change may not break any laws, but it is unethical Never subordinate your judgment to another person, even if that person is in a position of authority over you Whistle-Blowing -the act of alerting proper parties outside your organization of unethical conduct by employees of your client or employer -consider all relevant professional and legal requirements -exhaust all appropriate channels first and obtain legal and other advice before making your decision -consider provisions in the code on client and employer confidentiality Revenue Recognition Case Study -Company books revenue early (on ship date instead of when customer receives goods) -Go off of what they did historically and says it's up to judgment Conceptual Framework employs a "threats and safeguards" approach to analyzing threats to compliance with the ethics rules that members must employ when evaluating a matter that the code does not specifically address 1. Identify threat(s) to compliance with one or more rules 2. Evaluate whether the threat (or threats in the aggregate, if applicable) is significant --if the threat is not significant, stop - no further consideration is needed CONTINUED.......