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Audit > Professional Responsiblities & Ethics > Flashcards

Professional Responsiblities & Ethics Flashcards

1
Q

ET Rule 101

A

Independence

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2
Q

Define Independence

A

Ability to act with integrity and objectivity

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3
Q

Independence for Attestation

A 
ERA's
Examination
Review leading to assurance
Agreed upon procedure engagements leading to findings
Special Reports
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4
Q

Do not need to be independent for

A

Compilations
Consultations
Taxes

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5
Q

Independence “Covered Members”

A

All partners
Partners or managers who provide non attest services
All members of audit engagement team

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6
Q

Okay to do, does not hurt Independence

A

Consulting for no public. PCAOB forbids consulting

Litigation b/w client and CPA as long as amounts are immaterial to both sides and doesn’t involve matters of trust (billing disputes)

Loans are very limited, not home loans

Unpaid current audit fees

Operating Leases based on current market

Having checking or savings account

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7
Q

Auditor takes job with audit client

A

Prior to leaving: inform audit firm of conversations with client, immediately be removed from audit, audit firm must review work preformed

After leaving: firm must consider modifying audit plan, assure remaining audit team is objective

Next audit year must be reviewed by audit firm uninvolved

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8
Q

Audit client goes to work for firm

A

Must fully disassociate from client
Terminate any relationship with client
Dispose of any direct or material indirect financial interest
Repay or collect loans
Exit from all employee benefit programs, unless 100% employee cost
Liquidate 401

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9
Q

Requirements to preform Nonattest Services for attest client

A

Understanding of clients responsibility
Document understanding
Routine activities
Internal Audit Outsourcing, only if extension of normal audit

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10
Q

ET Rule 102

A

Integrity and Objectivity

Avoid conflicts of Interest
May use CPA designation on business cards IF title and employer are also disclosed

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11
Q

ET Rule 201

A 
General Standards
Competency
Professional Care
Plan and Supervise
Evidence
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12
Q

ET Rule 202

A

Compliance with Standards
Comply with:
FASB, GASB, PCAOB (SOX), IASB for IAS, AICPA

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13
Q

ET Rule 203

A

Accounting Principles

Can’t provide positive or negative assurance financials are GAAP if there are material departures from GAAP

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14
Q

ET Rule 301

A

Confidentiality

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15
Q

ET Rule 302

A

Contingent Fees

Not allowed unless judicial proceedings

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16
Q

ET Rule 501

A

Acts Discreditable
Holding client records for payment
Under estimating fee intentionally
Negligence in preparing financial statements
Filing fraudulent tax form
Felony
Adhere to all governing bodies, PCAOB is more restrictive
Solicitation or disclosure of CPA exam questions

17
Q

ET Rule 502

A

Advertising and Other forms of solicitation

Not false or misleading

18
Q

ET Rule 503

A

Commissions and Referral Fees

Only if both: non attest client and payment fully disclosed to client

19
Q

ET Rule 505

A

Form of Practice and name
Name can’t be misleading
Firm can’t say members of AICPA if all members are not
May practice under former partnership for 2 years

20
Q

ET Rule 591

A

Ethics and other responsibility can purchase and resell product

21
Q

Privacy Acts

A

Federal Privacy Disclosure (Gramm Leach, Bliley Act)

Must disclose electronically or written what will be dislosed and to who

22
Q

Working Papers

A

Accountant owns

23
Q

Under SOX how long do you have to retain work papers

A

7 years

24
Q

PCAOB reviews

A

Every year if over 100 audits annually

Every 3 years if under

Deficiencies reported to SEC and available to public

25
Q

Private Securities Litigation Reform Act 1995

A

Requires Audit tests to detect RIG
Related Parties Transactions
Illegal Acts
Going Concern Doubts

Requires quick notice of illegal acts
Auditor inform BOD w/I 1 day
BOD notify SEC by next business day
Auditor must resign or notify SEC w/i 1 day if BOD fails to notify

26
Q

Corporate and Criminal Fraud Accountability Act of 2002

A

Retain work papers 7 years
Felony to knowingly destroy or create documents
Statute of limitations on securities fraud extended to 5 years from fraud or 2 years after discovered
Extends whistleblower protection to firms employees
Punishable up to 10 years

27
Q

Independence GAO

A

Free from personal, external, and organizational impairments to independence.

28
Q

Under SOX how long do you have to retain work papers

A

7 years

29
Q

PCAOB reviews

A

Every year if over 100 audits annually

Every 3 years if under

Deficiencies reported to SEC and available to public

30
Q

Private Securities Litigation Reform Act 1995

A

Requires Audit tests to detect RIG
Related Parties Transactions
Illegal Acts
Going Concern Doubts

Requires quick notice of illegal acts
Auditor inform BOD w/I 1 day
BOD notify SEC by next business day
Auditor must resign or notify SEC w/i 1 day if BOD fails to notify

31
Q

Corporate and Criminal Fraud Accountability Act of 2002

A

Retain work papers 7 years
Felony to knowingly destroy or create documents
Statute of limitations on securities fraud extended to 5 years from fraud or 2 years after discovered
Extends whistleblower protection to firms employees
Punishable up to 10 years

32
Q

Independence GAO

A

Free from personal, external, and organizational impairments to independence.

33
Q

Under SOX how long do you have to retain work papers

A

7 years

34
Q

PCAOB reviews

A

Every year if over 100 audits annually

Every 3 years if under

Deficiencies reported to SEC and available to public

35
Q

Private Securities Litigation Reform Act 1995

A

Requires Audit tests to detect RIG
Related Parties Transactions
Illegal Acts
Going Concern Doubts

Requires quick notice of illegal acts
Auditor inform BOD w/I 1 day
BOD notify SEC by next business day
Auditor must resign or notify SEC w/i 1 day if BOD fails to notify

36
Q

Corporate and Criminal Fraud Accountability Act of 2002

A

Retain work papers 7 years
Felony to knowingly destroy or create documents
Statute of limitations on securities fraud extended to 5 years from fraud or 2 years after discovered
Extends whistleblower protection to firms employees
Punishable up to 10 years

37
Q

Independence GAO

A

Free from personal, external, and organizational impairments to independence.

Audit (10 decks)

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