Members in Business Flashcards
Who are members in business?
Members who are “employed or engaged on a contractual or volunteer basis in an executive, staff, governance, advisory, or administrative capacity in such areas as industry, the public sector, education, the not-for-profit sector and regulatory or professional bodies”
What are the threats that apply to members in business?
adverse interest threats advocacy threats familiarity threats self-interest threats self-review threats undue influence threats
What is an example of an adverse interest threat?
A member in business’s close relative is an investor in her employer’s closest competitor
A member in business has sued her employer
What is an example of an advocacy threat?
Obtaining favorable financing is dependent on the information that the member in business includes in a prospectus
The member in business gives or fails to give information that he knows will unduly influence the conclusions reached by a third party
What is an example of a familiarity threat?
A member in business has a long relationship with a third party and therefore stops reviewing the quality of the third-party’s work
A member in business hires a relative as a subordinate
A member in business regularly accepts gifts or entertainment from a firm that sells goods or services to the member’s employer
What is an example of a self-interest threat?
An member in business’s close relative owns stock in the company
A member in business is eligible for a performance-related bonus, and its value will be directly affected by the member in business’s decisions
What is an example of a self-review threat?
An internal auditor accepts work that she previously performed before she was promoted to her current position
A member in business accepts work that she previously performed that will be the basis for providing another professional service
What is an example of undue influence threat?
Pressured to:
Become associated with misleading information
Deviate from company policy
Change a conclusion regarding a tax or accounting position
Who creates safeguards for members in business?
Profession, legislation, regulation
Employer
What pressures may members in business face?
Pressure related to conflicts of interest
Pressures to influence presentation of information
Pressures to act without sufficient competence or due care
Pressures related to financial interests
Pressures related to gifts or entertainment
What are examples of discreditable acts?
Discrimination and harrasment in employment
Solicitation or disclosure of CPA Exam questions and answers
Failure to file a tax return or pay a tax liability
Negligence in preparing financial statement or other records
Failure to follow the rules for preparation of financial statements required by agencies like SEC, FCC and state commissioners
Entering into prohibited indemnification agreements and limited liability provisions
Disclosuing confidential information without employer’s permission or the application of another recognized exception
Promoting or marketing their firm by use of false, misleading, or deceptive ads
Improper use of CPA credential
