Introduction and Preface

Question 1

Part 1 of code

Answer 1

Sets out rules for members in public practice such as independent auditors, tax professionals, and consultants who provide professional services to third parties. This includes, of course, independence rules but also regarding integrity, objectivity, and discreditable acts.

Question 2

Part 2 of code

Answer 2

Sets out rules for members in business, such as internal auditors at a corporation. They need not worry about independence rules, and many of the other rules for members in business are identical(or nearly so) to the non-independence rules that apply to members in public practice.

Question 3

Part 3

Answer 3

Sets out rules for other members, such as those who are unemployed or retired, who are expected to avoid discreditable acts.

Question 4

The code is divided into 3 main parts

Answer 4

Part 1: applies to members in public practice (MIPP)
Part 2: applies to members in business (MIB)
Part 3: applies to other members (OM)

Question 5

Members serving in multiple roles should choose:

Answer 5

The most restrictive applicable provisions.

Question 6

Principals and rules of conduct contained in the code are supplemented by

Answer 6

1. Interpretations
2. Definitions
3. Applications
4. Where applicable, standards promulgated by other bodies such as: a) State certified public accounting (CPA) societies, b) Securities and Exchange Commission, c) Public Company Accounting Oversight Board, d) Government Accountability Office, e) Department of Labor, f) Various taxing authorities.

Question 7

The 6 major principals call for:

Answer 7

An unswerving commitment to honorable behavior, even at the sacrifice of personal advantage

Question 8

Responsibilities Principal

Answer 8

In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.

Question 9

Responsibilities Principal imposes:

Answer 9

Continuing responsibility on members to “cooperate with each other to:

1) Improve the art of accounting
2) Maintain the public’s confidence, and
3) Carry out the profession’s special responsibilities for self-governance

Question 10

Public Interest Principal

Answer 10

Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate a commitment to professionalism
(“A distinguishing mark of a profession is acceptance of its responsibility to the public”)

Question 11

Integrity Principal

Answer 11

To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity.
(Integrity is measured in terms of what is right and just; members should always ask “Am I doing what a person of integrity would do?”

Question 12

Objectivity and Independence Principal

Answer 12

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.
(“Only members in public practice must act with independence, but all members performing all services must act with objectivity and integrity”)

Question 13

Objectivity is a state of mind that requires

Answer 13

1. Impartiality
2. Intellectual honesty, and
3. Freedom from conflicts of interest

Question 14

Due Care Principal

Answer 14

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.
i. Perfection is not required
ii. Competence requires a commitment to continued learning-hence, continuing professional education
iii Members may derive competence from research or consultation with experts
iv. Due care entails: 1) Adequate planning of engagement, 2) Supervision of professional activities for which members are responsible.

Question 15

Scope and nature of services principal

Answer 15

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

Question 16

Scope and Natures services Principal - at minimum, members hould

Answer 16

i. Practice in firms that have good internal quality control procedures
ii Use their individual judgments to determine whether the scope and nature of services provided to an audit client would create a conflict of interest
iii. Individually assess whether a contemplated acticity is consistent with their role as professionals.

Question 17

Partner equivalent

Answer 17

A professional employee who is not a partner of the firm but who are either a) has the ultimate responsibility for the conduct of an attest engagement, including the authority to sign or affix the firm’s name to an attest report or issue, or authorize others to issue, and attest report on behalf of the firm without partner approval; or b) has the authority to bind the firm to conduct an attest engagement without partner approval.