Advertising and Confidentiality Flashcards
Which of the following acts by a CPA is a violation of professional standards regarding the confidentiality of client information?
Releasing financial information to a local bank with the approval of the client’s mail clerk.
Allowing a PCAOB inspector to review working papers of an issuer client without that client’s permission.
Responding to an enforceable subpoena.
Faxing a tax return to a loan officer at the request of the client.
Releasing financial information to a local bank with the approval of the client’s mail clerk.
This answer is correct because releasing financial information to a local bank without the approval of management of the client is a violation of confidentiality. Approval by a mail clerk is not sufficient.
Which of the following forms of advertising is most likely to be considered a violation of the AICPA Code of Professional Conduct?
Advertising including the types of services offered and the standard fees for the services.
Advertising including the experience of the firm’s professional staff.
Advertising including an indication that the firm has a close relationship with several tax court judges.
Advertising including the percentage of the firm’s staff that have CPA certificates.
Advertising including an indication that the firm has a close relationship with several tax court judges.
This answer is correct. The nature of the relationship is very subjective, and certainly whether it has any advantage in court proceedings is at issue.
A violation of the Code of Professional Conduct would least likely have occurred when a CPA in public practice
Used a records-retention agency to store the CPA’s working papers and client records.
Served as an expert witness in a damage suit and received compensation based on the amount awarded to the plaintiff.
Referred life insurance assignments to the CPA’s spouse, who is a life insurance agent.
Served simultaneously as state director of revenues and practiced public accounting in the same state.
Used a records-retention agency to store the CPA’s working papers and client records.
Using a records-retention agency to store the CPA’s working papers and client records is considered ethical if client confidentiality is maintained.
In which of the following situations is there a violation of client confidentiality under the AICPA Code of Professional Conduct?
A member discloses confidential client information to a court in connection with arbitration proceedings relating to the client.
A member discloses confidential client information to a professional liability insurance carrier after learning of a potential claim against the member.
A member whose practice is in bankruptcy discloses a client’s name.
A member uses a records retention agency to store client’s records that contain confidential client information.
A member whose practice is in bankruptcy discloses a client’s name.
This answer is correct because a member may not disclose client information in conjunction with a bankruptcy.
According to the AICPA Code of Professional Conduct, which of the following disclosures of client information by a member CPA to an outside party would normally require client consent?
Disclosure of confidential client information to a third-party service provider when the member does not enter into a confidentiality agreement with the provider.
Disclosure to a potential client of the name of a client for whom the member or member’s firm performed professional services.
Disclosure of confidential client information to the member’s liability insurance carrier in response to a potential claim.
Disclosure of confidential client information to a court or in documents in connection with a subpoena.
Disclosure of confidential client information to a third-party service provider when the member does not enter into a confidentiality agreement with the provider.
This answer is correct because the AICPA Code of Professional Conduct’s confidential client information rule requires a confidentiality agreement when disclosing confidential client information to a third party service provider.
Page, CPA, has T Corp. and W Corp. as audit clients. T Corp. is a significant supplier of raw materials to W Corp. Page also prepares individual tax returns for Time, the owner of T Corp. and West, the owner of W Corp. When preparing West’s return, Page finds information that raises going-concern issues with respect to W Corp. May Page disclose this information to Time?
Yes, because Page has a fiduciary relationship with Time.
Yes, because there is no accountant-client privilege between Page and West.
No, because the information is confidential and may not be disclosed without West’s consent.
No, because the information should only be disclosed in Page’s audit report on W Corp.’s financial statements.
No, because the information is confidential and may not be disclosed without West’s consent.
This answer is correct because a CPA is prohibited from disclosing confidential information learned in the course of an engagement.
A CPA in public practice may not disclose confidential client information regarding auditing services without the client’s consent in response to which of the following situations?
A review of the CPA’s professional practice by a state CPA society.
A letter to the client from the IRS.
An inquiry from the professional ethics division of the AICPA.
A court-ordered subpoena or summons.
A letter to the client from the IRS.
This answer is correct because a CPA may not disclose information to the IRS without the client’s consent.
Which of the following acts by a CPA is a violation of professional standards regarding the confidentiality of client information?
Releasing financial information to a local bank with the approval of the client’s mail clerk.
Allowing a review of professional practice without client authorization.
Responding to an enforceable subpoena.
Faxing a tax return to a loan officer at the request of the client.
Releasing financial information to a local bank with the approval of the client’s mail clerk.
It is extremely unlikely that a client’s mail clerk would have authority to approve the release of confidential financial information. The CPA, therefore, should not release it.
A CPA’s audit documentation
Need not be disclosed under a federal court subpoena.
Must be disclosed under an IRS administrative subpoena.
Must be disclosed to another accountant purchasing the CPA’s practice even if the client hasn’t given permission.
Need not be disclosed to a state CPA society quality review team.
Must be disclosed under an IRS administrative subpoena.
There are only a few circumstances in which information may be disclosed without the consent of the client. These include when a valid court order demanding release of the information is issued, when a quality review board of a state’s CPA society requests the information, when a client consents to disclosure, and whenever professional obligations otherwise require it.
A CPA in public practice may not disclose confidential client information regarding auditing situations without the client’s consent in response to which of the following situations?
A review of the CPA’s professional practice by a state CPA society.
A letter to the client from the IRS.
An inquiry from the professional ethics division of the AICPA.
A court-ordered subpoena or summons.
A letter to the client from the IRS.
A CPA should refuse to produce confidential client records in response to a mere request from the IRS or SEC.
Page, CPA, has T Corp. and W Corp. as audit clients. T Corp. is a significant supplier of raw materials to W Corp. Page also prepares individual tax returns for Time, the owner of T Corp., and West, the owner of W Corp. When preparing West’s return, Page finds information that raises going-concern issues with respect to W Corp.
May Page disclose this information to Time?
Yes, because Page has a fiduciary relationship with Time.
Yes, because there is no accountant-client privilege between Page and West.
No, because the information is confidential and may not be disclosed without West’s consent.
No, because the information should only be disclosed in Page’s audit report on W Corp.’s financial statements.
No, because the information is confidential and may not be disclosed without West’s consent.
This is the best answer, as this question emphasizes the importance of the confidentiality duty that accountants have vis-a-vis all their clients.
Which of the following statements concerning an accountant’s disclosure of confidential client data is generally correct?
Disclosure may be made to any state agency without a subpoena.
Disclosure may be made to any party on consent of the client.
Disclosure may be made to comply with an IRS audit request.
Disclosure may be made just for the heck of it.
Disclosure may be made to any party on consent of the client.
Disclosure may not be made to any party without either a court order or the consent of the client, unless the requesting party is a state CPA regulatory body. If the client consents, then the information may be released to anyone that the client has approved.
