AICPA Statements on Standards for Tax services Flashcards
What threats can impair an auditor’s independence?
1) Self review (reviewing own work)
2) advocacy (promoting client’s interest)
3) adverse interest (legal action against client)
4) familiarity (close relationship)
5) undue influence
6) Financial self interest
7) management participation
A loan to and from director is
prohibited from immediate family
1) spouse
2) spouse equivalent
3) dependent
(siblings are good unless they are dependants)
AICPA Stupulates
distinguishing mark of a profession is acceptance of it’s responsibility to the public
Difference between a CPA in public practice vs not
NOT public practice must maintain objectivity and integrity.
Public practice must maintain independence in addition to above.
Difference between consulting services and attest services
Consulting work is to the benefit of the client. Nature of work is solely between client and the CPA.
Attest work is expressing a conclusion about another’s parties work.
Standards for Tax Services 1 Tax return positions states that the CPA
has the responsibility to be an advocate for the client.
An accountant may be required
consult with experts to execute the job in a competent fashion
Some examples that impair independence
signing client checks
accepting large gifts
supervising personnel
Consulting services consists of
Advisory Implementation Product Services Transaction services staff and other support services consultations
Direct mailers to the public
are not allowed per CPA ethics
A Firm’s Purchasing a segment of an insurance companies business that performs accounting services for employee benefits
would impair independence.
A CPA should consider the Tax Sophistication of the client
prior to determining whether to give Oral advice or written advice.
According to the statement of Personal Financial Planning (PFP) the CPA should
1) assist clients to identify tasks that are essential to act on planning decisions
2) assist client to set target dates fro completion of tasks and
3) Identify parties responsible for completing them
What loans could be grandfathered in to determine when if a CPA who performed audit services (NOT compilation services) retains independence?
1) Home mortgages
2) Secured Loans
3) immaterial unsecured loans
these will not effect CPA performing compilation services independence
History of Professional rules and ethics for CPA Tax Practitioners. What is enforceable vs advisory?
AICPA Statements on Responsibilities in Tax Practice (1964-1977) (Advisory)
Statement on Standards for Tax Services (10/31/00 to present) (enforcable)
