CPA- AUD NEW EXAM WITH COMPLETE
SOLUTIONS LATEST UPDATE
AICPA Code of Professional Conduct
basis of ethical conduct for cpas in public practice and business.
Compromised of principles, rules, and interpretations
AICPA Code of Professional Conduct: Principles
1. Responsibilities
2. The Public Interest
3. Integrity
4. Objectivity and Independence
5. Due Care
6. Scope and Nature of Services
AICPA code of professional conduct: Rules
independence.
Integrity&objectivity
general standards
compliance with standards
accounting principles
confidential client info
contingent fees
acts discreditable
,advertising and other forms soliciting
commission and referal fees
form of org and name
A CPA is performing an audit for a long-time client. The CEO of the client is a close
friend and former college roommate of the CPA. Which of the following is the
appropriate action for the CPA to take?
Remove as lead auditor or withdraw from the engagement
Which of the following is the ethical issue in the circumstance wherein the CEO of a
longtime client being audited is a close friend and former college roommate of the
auditing CPA?
Independence problem
A CPA firm renders consulting services regarding a
contingent fee basis to a non-audit client. The same client now requests audit services
Terminate contingent fee arrangement before accepting engagement
Decline the audit engagement to maintain compliance with contingent fees and
independence
A CPA in public practice discovers confidential
information about a client's pending legal action that could impact the client's financial
statements while conducting an audit.
keep info C, discuss with client need to disclose in the FS if material
matter of confidential client info and possibly even integrity and objectiveness
,A CPA who is preparing a tax return for a client learns
that the client has not reported all income in the prior year
cpa should counsel client to file amended return for PY, if client refuses consider
whether to continue the professional relationship
A CPA firm has been engaged to perform an audit of the financial
financial statements of an entity after having provided bookkeeping services to that
entity which involved the preparation of financial statements
Can a diff team do the audit? if no safeguards are in place then the firm will have
breached independence rule regarding self review threats
An Threats in Public Practice and Business Conceptual Steps
Identify threats
Assess Significance of Threat
Apply Safeguard
The CFO who is a CPA in the firm, is requested by the CEO, to aggressively recognize
revenue so that the financial targets are met.
Threat : Threat from ceo
Importance: may impact the fair presentation of the financials and the integrity/objective
capability of the CEO.
Safeguard: The CPA can consult an external ethics advisor or put in place more controls
to recognize the revenue
Conceptual framework on Steps to Apply
CPD
Documentation
Professional consultation
Regular review
Conceptual Framework for independence
, Specifically designed to help CPAs identify, assess and respond to threats to
independence and thereby maintain compliance with the AICPA Code of Professional
Conduct.
how to apply conceptual framework for independence
Identify threat
Evaluate threat
Apply safeguard
Continually re assess
A CPA's firm is asked to provide non attest IT consulting services to an audit client. what
type of threats
Self review and management participation threats.significance will depend on nature of
the non-attest services and relation to audit subject matter. monitor scope of services to
confirm independence is not compromised
Employment Relationships:
Auditors cannot audit a company if certain members of management were recently
employed by the auditing firm and worked on the company's audit.
Business Relationships:
Auditors must avoid any business
relationship with the audit client that could compromise their
independence.
SOLUTIONS LATEST UPDATE
AICPA Code of Professional Conduct
basis of ethical conduct for cpas in public practice and business.
Compromised of principles, rules, and interpretations
AICPA Code of Professional Conduct: Principles
1. Responsibilities
2. The Public Interest
3. Integrity
4. Objectivity and Independence
5. Due Care
6. Scope and Nature of Services
AICPA code of professional conduct: Rules
independence.
Integrity&objectivity
general standards
compliance with standards
accounting principles
confidential client info
contingent fees
acts discreditable
,advertising and other forms soliciting
commission and referal fees
form of org and name
A CPA is performing an audit for a long-time client. The CEO of the client is a close
friend and former college roommate of the CPA. Which of the following is the
appropriate action for the CPA to take?
Remove as lead auditor or withdraw from the engagement
Which of the following is the ethical issue in the circumstance wherein the CEO of a
longtime client being audited is a close friend and former college roommate of the
auditing CPA?
Independence problem
A CPA firm renders consulting services regarding a
contingent fee basis to a non-audit client. The same client now requests audit services
Terminate contingent fee arrangement before accepting engagement
Decline the audit engagement to maintain compliance with contingent fees and
independence
A CPA in public practice discovers confidential
information about a client's pending legal action that could impact the client's financial
statements while conducting an audit.
keep info C, discuss with client need to disclose in the FS if material
matter of confidential client info and possibly even integrity and objectiveness
,A CPA who is preparing a tax return for a client learns
that the client has not reported all income in the prior year
cpa should counsel client to file amended return for PY, if client refuses consider
whether to continue the professional relationship
A CPA firm has been engaged to perform an audit of the financial
financial statements of an entity after having provided bookkeeping services to that
entity which involved the preparation of financial statements
Can a diff team do the audit? if no safeguards are in place then the firm will have
breached independence rule regarding self review threats
An Threats in Public Practice and Business Conceptual Steps
Identify threats
Assess Significance of Threat
Apply Safeguard
The CFO who is a CPA in the firm, is requested by the CEO, to aggressively recognize
revenue so that the financial targets are met.
Threat : Threat from ceo
Importance: may impact the fair presentation of the financials and the integrity/objective
capability of the CEO.
Safeguard: The CPA can consult an external ethics advisor or put in place more controls
to recognize the revenue
Conceptual framework on Steps to Apply
CPD
Documentation
Professional consultation
Regular review
Conceptual Framework for independence
, Specifically designed to help CPAs identify, assess and respond to threats to
independence and thereby maintain compliance with the AICPA Code of Professional
Conduct.
how to apply conceptual framework for independence
Identify threat
Evaluate threat
Apply safeguard
Continually re assess
A CPA's firm is asked to provide non attest IT consulting services to an audit client. what
type of threats
Self review and management participation threats.significance will depend on nature of
the non-attest services and relation to audit subject matter. monitor scope of services to
confirm independence is not compromised
Employment Relationships:
Auditors cannot audit a company if certain members of management were recently
employed by the auditing firm and worked on the company's audit.
Business Relationships:
Auditors must avoid any business
relationship with the audit client that could compromise their
independence.
