AUD 2 Professional Responsibilities and Ethics 2 Flashcards
A member who possesses a direct or material indirect financial interest in an attest client creates a self-interest threat that cannot be reduced to an _________ level and the member’s __________ would be impaired.
A member who possesses a direct or material indirect financial interest in an attest client creates a self-interest threat that cannot be reduced to an acceptable level and the member’s independence would be impaired.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Investments in a firm-sponsored plan are \_\_\_\_\_ financial interests of the firm.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Investments in a firm-sponsored plan are direct financial interests of the firm.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• The ability to supervise or participate in a plan’s investment decisions creates a \_\_\_\_\_ financial interest while the inability to do so results in an indirect financial interest.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• The ability to supervise or participate in a plan’s investment decisions creates a direct financial interest while the inability to do so results in an indirect financial interest.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Financial interests held by a defined benefit plan are only considered the financial interest of a member who is a trustee or otherwise supervises or participates in the plan’s investment d\_\_\_\_\_\_\_\_s.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Financial interests held by a defined benefit plan are only considered the financial interest of a member who is a trustee or otherwise supervises or participates in the plan’s investment decisions.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Allocated shares held in an employee stock ownership plan (ESOP) are \_\_\_\_\_\_ financial interests until the member has the right to dispose of the allocated shares of the ESOP.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Allocated shares held in an employee stock ownership plan (ESOP) are indirect financial interests until the member has the right to dispose of the allocated shares of the ESOP.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Interests resulting from share-based compensation arrangements, including rights to acquire equity interests and restricted stock awards are \_\_\_\_\_ financial interests even if they are not vested or exercisable.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
• Interests resulting from share-based compensation arrangements, including rights to acquire equity interests and restricted stock awards are direct financial interests even if they are not vested or exercisable.
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
Examples:
Financial interests in retirement, savings, compensation, or similar firm-sponsored plans may be direct or indirect financial interests, based on circumstances.
* Investments in a firm-sponsored plan are direct financial interests of the firm. * The ability to supervise or participate in a plan’s investment decisions creates a direct financial interest while the inability to do so results in an indirect financial interest. * Financial interests held by a defined benefit plan are only considered the financial interest of a member who is a trustee or otherwise supervises or participates in the plan’s investment decisions. * Allocated shares held in an employee stock ownership plan (ESOP) are indirect financial interests until the member has the right to dispose of the allocated shares of the ESOP. * Interests resulting from share-based compensation arrangements, including rights to acquire equity interests and restricted stock awards are direct financial interests even if they are not vested or exercisable.
A partnership interest is a _____ financial interest in a general.
A partnership interest is a direct financial interest in a genera.
A partnership interest is a ______ financial interest in a general or a limited partnership.
• A general partner has a \_\_\_\_\_ financial interest in the partnership’s financial interests.
A partnership interest is a direct financial interest in a general or a limited partnership.
• A general partner has a direct financial interest in the partnership’s financial interests.
A partnership interest is a ______ financial interest in a general or a limited partnership.
• A limited partner has an \_\_\_\_\_\_\_\_ financial interest in the partnership’s financial interests
unless the limited partner controls the partnership, supervises or participates in the partnership’s investment decisions, or has the ability to replace the general partner or participate in investment decisions, in which case the interest is ______.
A partnership interest is a direct financial interest in a general or a limited partnership.
* A general partner has a direct financial interest in the partnership’s financial interests. * A limited partner has an indirect financial interest in the partnership’s financial interests
unless the limited partner controls the partnership, supervises or participates in the partnership’s investment decisions, or has the ability to replace the general partner or participate in investment decisions, in which case the interest is direct.
An ownership interest in a limited liability company (LLC) is a ______ financial interest in the LLC.
An ownership interest in a limited liability company (LLC) is a direct financial interest in the LLC.
An ownership interest in a limited liability company (LLC) is a ______ financial interest in the LLC.
• The managing member and those with the ability to control, supervise, or participate in the LLC’s investment decisions have \_\_\_\_ financial interests in the LLC’s financial interests.
An ownership interest in a limited liability company (LLC) is a direct financial interest in the LLC.
• The managing member and those with the ability to control, supervise, or participate in the LLC’s investment decisions have direct financial interests in the LLC’s financial interests.
An ownership interest in a limited liability company (LLC) is a ______ financial interest in the LLC.
• Others without the ability to control, supervise, or participate in the LLC’s investment decisions have \_\_\_\_\_\_\_ financial interests.
An ownership interest in a limited liability company (LLC) is a direct financial interest in the LLC.
• Others without the ability to control, supervise, or participate in the LLC’s investment decisions have indirect financial interests.
An ownership interest in a limited liability company (LLC) is a ______ financial interest in the LLC.
* The managing member and those with the ability to control, supervise, or participate in the LLC’s investment decisions have \_\_\_\_ financial interests in the LLC’s financial interests. * Others without the ability to control, supervise, or participate in the LLC’s investment decisions have \_\_\_\_\_\_\_ financial interests.
An ownership interest in a limited liability company (LLC) is a direct financial interest in the LLC.
* The managing member and those with the ability to control, supervise, or participate in the LLC’s investment decisions have direct financial interests in the LLC’s financial interests. * Others without the ability to control, supervise, or participate in the LLC’s investment decisions have indirect financial interests.
The account owner of a Section 529 plan (Education savings plan) has a ______ financial interest in the plan, but beneficiaries do not have a direct or indirect financial interest in the plan.
The account owner of a Section 529 plan (Education savings plan) has a direct financial interest in the plan, but beneficiaries do not have a direct or indirect financial interest in the plan.
The account owner of a Section 529 plan (Education savings plan) has a direct financial interest in the plan, but beneficiaries do not have a ______ or ________ financial interest in the plan.
The account owner of a Section 529 plan (Education savings plan) has a direct financial interest in the plan, but beneficiaries do not have a direct or indirect financial interest in the plan.
If an estate or trust has any direct or any material indirect financial interest in an attest client, a threat to the member’s ___________ would not be at an acceptable level
if the member served as trustee of the trust, or executor or administrator of the estate, during the period of the professional engagement
if any of the following also applied:
- The member had the authority to make investment decisions for the trust or estate;
- The trust or estate either owned an equity interest in excess of 10% of the attest client’s outstanding equity securities; or
- The value of the equity interest in the attest client exceeded 10% of the total assets of the trust or estate.
Trusts and Estates
If an estate or trust has any direct or any material indirect financial interest in an attest client, a threat to the member’s independence would not be at an acceptable level if the member served as trustee of the trust, or executor or administrator of the estate, during the period of the professional engagement if any of the following also applied:
- The member had the authority to make investment decisions for the trust or estate;
- The trust or estate either owned, or was committed to acquire, an equity interest in excess of 10% of the attest client’s outstanding equity securities; or
- The value of the equity interest in the attest client exceeded 10% of the total assets of the trust or estate.
When the CPA is the grantor of a trust, the trust and its investments are considered _____ financial interests of the CPA,
even if the trust is a blind trust, if the trust’s investments ultimately revert to the CPA, or if the CPA:
- Can amend or revoke the trust;
- Has the authority to control the trust; or
- Has the ability to participate in, or supervise, the trust’s investment decisions.
If none of those circumstances apply, the CPA has a _____ financial interest in the trust and an indirect financial interest in the trust’s underlying investments.
When the CPA is the grantor of a trust, the trust and its investments are considered direct financial interests of the CPA,
even if the trust is a blind trust, if the trust’s investments ultimately revert to the CPA, or if the CPA:
- Can amend or revoke the trust;
- Has the authority to control the trust; or
- Has the ability to participate in, or supervise, the trust’s investment decisions.
If none of those circumstances apply, the CPA has a direct financial interest in the trust and an indirect financial interest in the trust’s underlying investments.
When a CPA is a participant in an employee benefit plan that is either sponsored by an attest client or is, itself, an attest client, ____________ is generally impaired due to the s___ - ________ threat.
Participation in Employee Benefit Plans
When a CPA is a participant in an employee benefit plan that is either sponsored by an attest client or is, itself, an attest client, independence is generally impaired due to the self-interest threat.
When a CPA is a participant in an employee benefit plan, independence is generally impaired due to the self-interest threat.
The threat would be reduced to an _________ level in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
Participation in Employee Benefit Plans
When a CPA is a participant in an employee benefit plan that is either sponsored by an attest client or is, itself, an attest client, independence is generally impaired due to the self-interest threat.
The threat would be reduced to an acceptable level, however, in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
plied with.
When a CPA is a participant in an employee benefit plan, independence is generally impaired due to the self-interest threat.
The threat would be reduced to an acceptable level in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
In addition:
• The CPA is required as an employee to p_______ in the plan, which is offered to all employees in comparable positions;
Participation in Employee Benefit Plans
When a CPA is a participant in an employee benefit plan that is either sponsored by an attest client or is, itself, an attest client, independence is generally impaired due to the self-interest threat.
The threat would be reduced to an acceptable level, however, in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
In addition:
- The CPA is required as an employee to participate in the plan, which is offered to all employees in comparable positions;
- The CPA does not influence or control key aspects of the plan such as investment strategy, benefits, or other management activities; and
- The CPA may not serve in a role prohibited by ET 1.275, Current Employment or Association with an Attest Client.
When, as a result of an immediate family member’s employment, that family member is a participant in a plan that is an attest client or is sponsored by an attest client, the requirements of ET 1.270, Family Relationships with Attest Clients, are to be complied with.
When a CPA is a participant in an employee benefit plan, independence is generally impaired due to the self-interest threat.
The threat would be reduced to an acceptable level in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
In addition:
• The CPA is required as an employee to p_______ in the plan, which is offered to all employees in comparable positions;
Participation in Employee Benefit Plans
When a CPA is a participant in an employee benefit plan that is either sponsored by an attest client or is, itself, an attest client, independence is generally impaired due to the self-interest threat.
The threat would be reduced to an acceptable level, however, in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
In addition:
- The CPA is required as an employee to participate in the plan, which is offered to all employees in comparable positions;
- The CPA does not influence or control key aspects of the plan such as investment strategy, benefits, or other management activities; and
- The CPA may not serve in a role prohibited by ET 1.275, Current Employment or Association with an Attest Client.
When, as a result of an immediate family member’s employment, that family member is a participant in a plan that is an attest client or is sponsored by an attest client, the requirements of ET 1.270, Family Relationships with Attest Clients, are to be complied with.
The threat would be reduced to an acceptable level, however, in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one g_________ organization, one of which is the employer of the CPA.
In addition:
• The CPA does not influence or control key aspects of the plan such as investment strategy, benefits, or other management activities;
The threat would be reduced to an acceptable level, however, in certain circumstances the CPA is a participant in a public employee retirement plan that is sponsored by more than one governmental organization, one of which is the employer of the CPA.
In addition:
• The CPA does not influence or control key aspects of the plan such as investment strategy, benefits, or other management activities;
A firm may have funds on deposit at an attest client that is a bank or similar depository institution without impairing its independence as long as the firm concludes that the likelihood that the institution will experience financial difficulties is r______.
Depository, Brokerage, and Other Accounts
A firm may have funds on deposit at an attest client that is a bank or similar depository institution without impairing its independence as long as the firm concludes that the likelihood that the institution will experience financial difficulties is remote.