ch 2 Ethical Principles and Reasoning

Question 1

The Core Principles of Professional Conduct

6 principles applicable to all members of accounting profession

Answer 1

Responsibilities- in carrying out responsibilities as professionals, members should exercise sensitive professional and moral judgements in all their activities

Public interest- members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism

Integrity- to maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity

Objectivity and independence- a member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services

Due care-A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.

Scope and nature of services- A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

Question 2

General Standards of AICPA

Answer 2

Professional Competence
sound judgement in application of the rules w/ reasonable care and diligence
have appropriate technical skills and qualifications
recognize ur own limitations
accept client = competence

Due Professional Care

Planning and Supervision
handle engagement efficiently & put good team together
responsible for peers and supervise them

Sufficient Relevant Data
support your conclusion and do analysis

Question 3

Accounting Principles Rule AICPA

Answer 3

comply w/ GAAP

sometimes GAAP departure is ok but need to report it

Question 4

Malpractice

Prima Facie Case

Answer 4

professional negligence

a client or third party, like a creditor or investor, may sue an accountant or accounting firm for malpractice. to do so, the plaintiff must prove that

1. defendant has a duty to use reasonable care for the plaintiff
2. defendant breaches duty
3. harm
4. causation