Class 18 Keeping the Profession Professional Flashcards
Which of the following is an essential feature that makes a profession?
a) extensive training
b) provision of important services to society
c) training and skills largely intellectual in character
d) all of the above
d) all of the above
True or false.
One source of ethical guidance is in the from of GAAP or GAAS, as set forth by standard setters (e.g. IFAC, PCAOB, FASB, etc.).
True
Are codes of conduct a source of ethical guidance?
YES
What is the purpose of professional codes of conduct?
Provide guidance about conduct expected of members so that…
- services offered will be of acceptable quality
- clients and public will not be harmed
- reputation of profession will not be sullied
Is it feasible to have a rule for everything?
NO
- Codes of conduct need to blend fundamental principles w/ limited number of specific rules
What is the typical framework for a code of conduct for professional accountants?
1) Intro and purpose
2) Fundamental principles and standards
3) General rules
4) Specific rules
5) Discipline
6) Interpretations of rules
For professional accountants, what is the most fundamental principle to follow?
- Serve the public interest
Define public interest
Collective well-being of the community of people and institutions the professional accountant serves
In public accounting, we tend to reject which ethical paradigm?
EGOISM
In public accounting, why do we tend to reject egoism?
As a CPA, we have duties to the firm, client, and ultimately the public
True or false.
Another fundamental principle in the codes of conduct of professional accountants is to perform with (1) integrity, (2) objectivity and independence, (3) professional competence, due care, and professional skepticism, and (4) blab to everyone about everything.
False.
(4) Confidentiality
Which fundamental principle requires a professional accountant to be straightforward and honest in all professional and business relationships?
Integrity
Which fundamental principle requires a professional accountant to not allow bias, conflict of interest or undue influence of others to override professional or business judgements?
Objectivity
Which fundamental principle requires a professional accountant to have a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service?
Professional competence
Which fundamental principle requires a professional accountant to act diligently and in accordance with applicable technical and professional standards when providing professional services?
Due Care
Which fundamental principle requires a professional accountant to comply with relevant laws and regulations and to avoid any action that discredits the profession?
Professional behavior
Which fundamental principle requires a professional accountant to respect the confidentiality of info acquired as a result of professional business relationships?
Confidentiality
Are sanctions public?
YES
Are ancillary orders for community work and financial report a possible sanction for unethical behavior of professionals under professional accounting codes of conduct and regulatory authorities?
YES
What does IFAC stand for?
Int’l Federation of Accountants
How and why do Texas state rules complement and overlap the AICPA Code of Professional Conduct?
- All about independence and how to conduct yourself as a professional
- Interests are aligned and therefore emphasize similar principles
- State rules reference GAAP
How and why do Texas state rules supersede the AICPA Code of Professional Conduct?
- AICPA = voluntary professional association, not a licensing authority (but the state is)
- State codes often go beyond the AICPA Code (“Discreditable Acts” = catch-all for those who didn’t violate specific rule)
How and why do Texas state rules get superseded by the AICPA Code of Professional Conduct?
- To the extent that state rules reference standards by AICPA rules
Why did the SEC ban certain non-audit services from being offered to SEC registrant audit clients even though it has been possible to effectively manage such conflict of interest situations?
- Faced w/ the inability of AA to resist the lure of profit and protect the public interest
- And the fact that such conflicts were common practice
- So SOX required SEC to eliminate the most problematic conflicting services
If the provision of management advisory services an create conflicts of interest, why are audit firms still offering them?
- B/c they are lucrative services that benefit their clients w/o compromising the auditor’s objectivity
If an auditor’s fee is paid from the client company, isn’t there a conflict of interest that may lead to a lack of objectivity?
YES
- This is a normal practice that could give management an opportunity to influence the judgement of the auditor
- However, existence of BOD audit committees lessen the chance for undue influence to occur (mandated by SOX/SEC)
Who was the guest speaker from EY that talked about professionalism, duties to the public, duties to the client, and independence?
Wayne Ebersberger
