Structure of the Code
The AICPA code applies to whom?
Members
What is one example of an act discreditable for a member in public practice?
Failure to pay taxes, negligence, keeping confidential client info, etc.
What can auditors use to reduce independence threats to an acceptable level?
Safeguards.
A CPA’s duty to keep a client’s private information private is called what
Confidentiality
The idea that the public interest aspect of members’ services requires that services provided be consistent with acceptable professional behavior.
Scope and nature of services.
The AICPA “Act’s Discreditable” rule applies to members until when?
Until they die - forever.
What is one example of a familiarity threat that does not involve an immediate family member being a part of an attest client?
An engagement team member was a high ranking member of the firm, a team member has been on the engagement for a prolonged period of time, etc.
A CPA can withhold work papers pertaining to an audit engagement until the client:
Pays their fees
The AICPA Code uses these three categories to help determine which independence and ethics requirements apply to a CPA
What are members in public practice, members in business, and other members?
This professional organizations code of conduct dictates what actions are a violation in acts discreditable
AICPA
What type of financial interest in an attest client is prohibited by the AICPA code?
direct Interest and material indirect interest.
A CPA may disclose confidential client information without the client's consent to comply with one of these valid, enforceable legal orders.
A subpoena or summons
When a scenario doesn’t apply perfectly to a rule or regulation, ___ should be applied.
The conceptual framework.
A CPA who loses a harassment ruling isn't yet presumed to have violated the Code while this is still pending
An appeal
An auditor's spouse owns stock in a client after the parties agree to an audit but before any fieldwork has begun. The value was 9% of all outstanding shares and she sold that interest prior to the start of the audit work. Is this a breach of independence?
Yes, because even though fieldwork hasn’t begun, the engagement has technically been signed off on. You cannot hold material indirect investments in the same period as the audit.
A company pays a CPA to prepare its executives' personal tax returns. For confidentiality purposes, the company and the executives are this many clients.
Two Clients
A member may deviate from the AICPA code if practicing internationally and following the foreign nations ___.
rules of organized accounting.
An AICPA member was convicted of sexual harassment. The crime did not involve a client or colleague, nor did the assault happen on company property? Would this be considered an act discreditable and why?
Yes because harassment/discrimination rulings are discreditable regardless of whether they occur in a professional setting or not.
An audit partner provides the client's CEO with extensive advice about how the company's accounting department should be organized and tells management which employees should perform specific accounting functions.Which independence concern does this raise?
Management participation threat.
In Couch v. United States (1973), the Supreme Court ruled that this does not exist under federal law, so a CPA can be forced to hand over a client's records.
Accountant-Client Priveledge