ch 2 review Flashcards
AICPA members in public practice are
employed by a public accounting firms
there are extra rules in public accounting like
have to be independent and bound by client confidentiality
threats:
relationships or circumstances that could compromise a member’s compliance with the rules
self-review threat:
put in position of auditing your own work
advocacy threat:
promote a client’s interest to point of compromising our own integrity or idenpendence
familiarity threat:
long term/ close relationships which causes the auditor to be too sympathetic or accepting client work
undue influence threat:
subordinate our judgement to a client because of the client’s expertise or aggressive personality
self-interest threat
auditor benefits from a financial interest or relationship with client (exception for mutual fund)
adverse interest threat
auditor’s interest are opposed to client’s interest (ex: litigation with client)
management participation threat
auditor cannot take on the role of management
safeguards
actions or other measures that may eliminate a threat or reduce a threat to an acceptable level
three categories of safeguards
- created by profession, legislation, or regulation
- implemented by client
- implemented by firm
1.200 of independence says
“a member in public practice shall be independent in the performance of professional services as required by standard promulgated by bodies designated by the Council”
what types of services must one be independent for?
attestation and audit
independence rules apply to _________________
covered members
