9/16 Class Flashcards

1
Q

how do we prepare for the test

A

review the homework problems and do the additional problems in the chapters
she will post a review sheet

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2
Q

AICPA standards

A

don’t use the archive

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3
Q

code of professional conduct

A

use this for your first case

don’t use the code of prof conduct revised

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4
Q

Chapter 4

A

Professional Ethics

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5
Q

CPA Responsibilities

A

Competent
fair to all parties not biased
independent of client
trusted third party

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6
Q

CPE

A

requirements of CPA’s to fulfill every year

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7
Q

standards of admission to the profession

A

min
education
experience
CPA

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8
Q

Need for public confidence

A

product of CPA = credibility

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9
Q

confidence enhancements

A

Peer Review
SEC & PCAOB
Legal Liability

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10
Q

Professional ethics

A
Code of Professional Conduct
AICPA
   developed code
   monitors private companies
PCAPB & SEC
   accepts code
   adds and modifies for public ...companies
   monitors public companies
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11
Q

Code of Professional Conduct

A

principles
provide overall framework - not enforceable
philosophical underpinnings
rules
govern performance of professional services
min standards - enforceable
interpretations
provide guidelines as to the …scope and application of rules
help members understand …scope - not enforceable - justify …departure
ethics ruling
summarize application of rules …and interpretations to particular …factual circumstances - not …enforceable - justify departure
published in journal of …accountancy

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12
Q

Ethical Principles

A

Preample
CPA in AICPA assumes …obligation of self discipline …above and beyond …requirements of laws and …regulations
Article 1 - Responsibilities

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13
Q

Integrity and Objectivity

A

Free of conflicts of interest
no misrepresentation of facts
applies to all professional services

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14
Q

General Standards

A
Professional competence
due professional care
planning and supervision
obtain sufficient relevant data
applies to all professional services
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15
Q

203 Accounting Principles

A

Members shall not:

express opinion that financial

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16
Q

PCAOB & SEC Independence

A
Prohibited Services
   bookkeeping
   financial 
Other Issues
   Partner rotation
   Answer to audit committee
   Post public accounting emp
   Internal audit outsourcing
   management and human resources
   broker dealer/investment banker
   legal
17
Q

auditor liability

A
effects of auditor liability
costs
reputation damage
reluctant to accept new audits
criminally tried for malpractice
18
Q

prudent person concept

A

people are responsible to act with reasonable care

19
Q

negligence

A

failure to exercise degree of care that ordinary prudent person would exercise under similar circumstances

20
Q

gross negligence

A

lack of even slight care - reckless disregard for truth and professional repsonsibilities

21
Q

fraud misrepresentation

A

intent to deceive

22
Q

privity

A

individual or entity in which an auditor is in contract

23
Q

third party beneficiary

A

party outside contracting party benefiting under the contract

24
Q

engagement letter

A

contract communicating relationship and services, time frames, fee, responsibilities, etc

25
proximate cause
the reason a loss was incurred
26
contributory negligence
plaintiff or client was partly to blame for negligence and suffered a loss
27
comparative negligence
allocate damages between contributory parties
28
common law
unwritten based on historical court decisions society's concept of fairness
29
litigation against auditors
...
30
common law
cases/approaches used to
31
negligence lawsuits by clients
``` plaintiff must show: duty imposed(engaged) violation of duty(materially) proximate cause damages were suffered ```