A7 AICPA Code of Conduct Flashcards
AICPA’s Code of Professional Conduct
Governs any service that a member performs (audits, EAR Engagements, etc). A professional code of conduct is a distinguishing mark of a profession that accepts a high degree of responsibility toward the public.
Key words to enhance the clarity of interpretations include Consider, Evaluate, & Determine
Independence
Independence is not impaired if the auditor has a fully collateralized car loan, a cash advance, a credit card balance not exceeding $10,000, a passbook loan, or a bank account that is fully insured by the government.
Confidential Information
Auditors must not disclose confidential information without client approval. The only exceptions are:
When complying with a subpoena/court order
Part of a peer review/quality review of professional practices
Requested by Board of AICPA
Legal defense against a lawsuit
Contingent Fees
Permitted only in two cases:
When fees are fixed by a court or judicial proceeding
When fees are mandated by law & legislation
Threats to Compliance
Threats to the fundamental principles include:
Adverse interest threat
Advocacy threat
Familiarity threat
Mgmt participation threat
Self interest threat
Self review threat
Adverse Interest Threat
A member will not act with objectivity because their interests are opposed to the clients
Advocacy Threat
A member will promote a client’s interests or position to the point that their objectivity is compromised.
Familiarity Threat
A long or close relationship with a client, a member will become too sympathetic to the client’s interests or too accepting of the clients work.
Mgmt Participation Threat
A member will take a role of the clients mgmt or assume mgmt’s responsibilities
Self Interest Threat
A member could benefit financially or otherwise, from an interest or in a relationship with a client
Self Review Threat
A member will not appropriately evaluate the results of a previous judgement made or a service performed or supervised by the member, and that member will rely on that service in forming a judgement as part of another service.
