Professional Responsibilities & Ethics Flashcards
How should an auditor maintain independence?
Fact and Appearance
Who falls under covered member?
All partners in the office, partners/officers who provide non-attest to the audit client, and all members of the audit team
What are the differences between PCAOB and ASB standards when it comes to non attest services?
PCAOB does not allow non-audit services to audit clients except tax services (only if approved by the audit committee and disclosed to SEC). ASB allows non-attest services to audit clients.
What should an auditor maintain when performing a service regardless of independence?
Objectivity and integrity
When can an auditor reveal client information without client permission?
Valid government subpoena/summons, inquiry by AICPA board, quality control peer review program
Are contingent fees allowed?
Only when representing a client in an examination of an income tax return, filing an amended income tax return based on a tax issue subject to a test case/evolving position, or an amount greater than threshold for review by Joint Committee on Internal Revenue Taxation. All others are not allowed.
What are some discreditable acts of an accountant?
Holding client’s records to enforce a payment
Deliberate underbidding
Negligence in preparing F/S
Filing fraudulent tax return for self and or client
Commission of a felony
Not adhering to all requirements of governing bodies/GAAP/GAAS
Solicitation or discussing CPA exam questions/answers
When are commissions and referral fees okay to be received?
If both from non-attest client and payment is fully disclosed to client
Does a CPA need to be independent when it comes to consulting services?
No, but should always maintain integrity and objectivity and disclose any conflicts of interest
How often will the audit firms be reviewed under SOX?
Annually for firms that conduct more than a 100 audits a year and 3 years if less than a 100 audits annually.
What does the Private Securities Litigation Reform Act of 1965 require?
Related Party transactions
Illegal Acts
Going concern issues
