9/16 Class

Question 1

how do we prepare for the test

Answer 1

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

Question 2

AICPA standards

Answer 2

don’t use the archive

Question 3

code of professional conduct

Answer 3

use this for your first case

don’t use the code of prof conduct revised

Question 4

Chapter 4

Answer 4

Professional Ethics

Question 5

CPA Responsibilities

Answer 5

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

Question 6

CPE

Answer 6

requirements of CPA’s to fulfill every year

Question 7

standards of admission to the profession

Answer 7

min
education
experience
CPA

Question 8

Need for public confidence

Answer 8

product of CPA = credibility

Question 9

confidence enhancements

Answer 9

Peer Review
SEC & PCAOB
Legal Liability

Question 10

Professional ethics

Answer 10

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

Question 11

Code of Professional Conduct

Answer 11

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

Question 12

Ethical Principles

Answer 12

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

Question 13

Integrity and Objectivity

Answer 13

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

Question 14

General Standards

Answer 14

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

Question 15

203 Accounting Principles

Answer 15

Members shall not:

express opinion that financial

Question 16

PCAOB & SEC Independence

Answer 16

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

Question 17

auditor liability

Answer 17

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

Question 18

prudent person concept

Answer 18

people are responsible to act with reasonable care

Question 19

negligence

Answer 19

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

Question 20

gross negligence

Answer 20

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

Question 21

fraud misrepresentation

Answer 21

intent to deceive

Question 22

privity

Answer 22

individual or entity in which an auditor is in contract

Question 23

third party beneficiary

Answer 23

party outside contracting party benefiting under the contract

Question 24

engagement letter

Answer 24

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

Question 25

proximate cause

Answer 25

the reason a loss was incurred

Question 26

contributory negligence

Answer 26

plaintiff or client was partly to blame for negligence and suffered a loss

Question 27

comparative negligence

Answer 27

allocate damages between contributory parties

Question 28

common law

Answer 28

unwritten based on historical court decisions society’s concept of fairness

Question 29

litigation against auditors

Answer 29

…

Question 30

common law

Answer 30

cases/approaches used to

Question 31

negligence lawsuits by clients

Answer 31

plaintiff must show:
   duty imposed(engaged)
   violation of duty(materially) 
   proximate cause
   damages were suffered