Other Ethics Codes Flashcards
In the event the American Institute of Certified Public Accountants rules conflict with the Public Company Accounting Oversight Board rules, which rule should the practitioner follow?
The Public Company Accounting Oversight Board (PCAOB)
What does the acronym PCAOB stand for?
Public Company Accounting Oversight Board
List the services that CPAs may not provide to public company audit clients.
- Bookkeeping or other services related to the accounting records of financial statements;
- Financial information systems design and implementations;
- Appraisal or valuation services, fairness opinions, or contributions-in-kind reports;
- Actuarial services;
- Internal audit outsourcing services;
- Management functions or human resources;
- Broker or dealer, investment adviser, or investment banking services;
- Legal services and expert services unrelated to audit.
Is a public company required to rotate audit firms?
Sarbanes-Oxley does not require a public company to rotate audit firms.
Who must be rotated under Sarbanes Oxley?
- Lead audit partner and reviewing partner (5-on/5-off);
- Other partners playing a significant role (7-on/2-off).
For what type of service is compensation prohibited for auditors of public companies?
Compensation for selling nonaudit services is prohibited.
Who hires, compensates, and fires auditors of public companies?
The audit committee (composed entirely of independent directors) performs these actions.
On what firms must the Public Company Accounting Oversight Board (PCAOB) perform annual audits?
Firms with 100 or more public company audits.
List the standards that the Public Company Accounting Oversight Board (PCAOB) is responsible for establishing.
Auditing Quality Control Ethics Independence
List the Public Company Accounting Oversight Board’s basic functions.
- Registering public accounting firms
- Setting up standards
- Inspecting public accounting firms Investigating violations
- Enforcing compliance
What governmental body oversees the Public Company Accounting Oversight Board (PCAOB)?
The Securities and Exchange Commission (SEC)
What does the acronym GAO stand for?
Government Accountability Office
What audits do the Government Accountability Office guidelines apply to?
Audits of:
- Government entities
- Entities that receive government grants
What general issues do the Government Accountability Office address?
- Independence
- Ethical Principles
- Public Interest
- Integrity
- Objectivity
- Proper use of government information, resources & position
- Professional Behavior
What does the acronym AO stand for?
Auditing Organization
List the types of audit impairments that are the focus of the Government Accountability Office.
- Personal Impairments
- External Impairments
- Organizational Impairments
What requirements does the Government Accountability Office outline regarding the assessing of impact that nonaudit services have on the audit?
Auditing Organizations (AOs) must not provide nonaudit services that involve performing management functions or making management decisions; and AOs must not audit their own work or provide nonaudit services in cases where the nonaudit services are significant to the subject matter of the audit.
What two primary independence concerns do the Department of Labor independence rules address?
Financial ties; Employment ties
What does the acronym EBSA stand for?
Employee Benefits Security Administration
What does the acronym ERISA stand for?
Employee Retirement Income Security Act
What does the acronym DOL stand for?
Department of Labor
What does the acronym IESBA stand for?
International Ethics Standards Board for Accountants
List two types of safeguards against threats to Independence.
- Created by profession, legislation or regulation
- Present in the workplace
- Firm-wide
- Engagement-specific
List the categories of threats to independence outlined in the International Federation of Accountants (IFAC) code.
- Self-Interest Threats
- Self-Review Threats
- Advocacy Threats
- Familiarity Threats
- Intimidation Threats
