2. Professional Responsibilities Flashcards
When does actual or threatened litigation impair independence?
1) Ligation has begun alleging deficient audit work 2) litigation has begun alleging fraud or deceit by current management and 3) management has expressed an intention to commence litigation alleging deficient audit work, and the auditor concluded that it is probable that such a claim will be filed.
When is an accounting firm’s independence impaired?
If the firm and the client have a material cooperative arrangement or a covered member has any direct or any material indirect financial interest.
What is a CPA required to disclose when without it the financial statements would be misleading?
1) the departure 2) the approximate effects of the departure 3) the reasons compliance would result in misleading financial statements. This requirement only applies if the effect on the statements or data is material
What principle embodies a commitment to act for the benefit of clients, creditors, investors, and others?
The public interest.
What should a CPA in deciding whether or not to accept a new client?
The CPA should assess their competence to perform the audit.
Are client-provided records required to be given back even if the fee is still owed?
Yes.
In what circumstances can a CPA withhold member’s work products?
If 1) fees are due 2) the work product is incomplete 3) the member is complying with professional standards or 4) ligation exists regarding the engagement or the member’s work
Is the practice of public account under the name of an association or group permitted?
No.
What does the AICPA Code contain?
Principle and Rules?
Describe the Principles of the AICPA code.
The are goal-oriented and call for unswerving commitment to honorable behavior but are not mandatory.
Describe the Rules of the AICPA code.
The rules provide more specific guidance. AICPA bylaws require members to adhere to the Rules. Those who fail to comply with the rules may face disciplinary action.
What are the main elements of the revised Code and who are they applicable to?
1) the Preface, applicable to all members
2) Part 1, applicable to members in public practice
3) Part 2, applicable to members in business
4) Part 3, applicable to other members
What does the risk based approach evaluate?
That a CPA is not independent or is perceived (by a reasonable party) as not independent.
Is solicitation permitted under the Code of Professional Conduct?
Yes as long as it is not false, misleading, or deceptive.
