Rule 501, 502, 503, 505 Flashcards
What is Rule 501?
A member shall not commit an act discreditable to the profession.
What is Interpretation 501-1?
A CPA’s response to a client’s request for records depends upon the nature of the records and certain circumstances.
What is the policy regarding records provided by the client?
Should be returned to client at client’s request.
What is the policy regarding CPA-prepared records that the CPA was not specifically engaged to prepare and are not in client’s books and records?
Should be provided except that they may be withheld if there are fees due to the CPA for the specific work produced.
What is the policy regarding CPA work products (eg. deliverables such as audit report, tax returns)?
Should be provided to the client except that they may be withheld if:
- There are fees due on that work product
- Work product is incomplete
- Needed to comply with a professional standard
- There is threatened or outstanding litigation concerning the engagement or CPA’s work
What is the policy regarding CPA working papers?
They do not need to be provided because they are prepared solely for the engagement either by the auditor or by the client. They are the CPA’s property.
What is Interpretation 501-2? (discrimination)
Discrimination on basis of race, color, religion, sex, age or national origin is discreditable.
What is Interpretation 501-6? (CPA exam)
Soliciting or disclosing May 1996 or later Uniform CPA Examination questions or answers without AICPA written authorization has committed an act discreditable to the profession
What is Interpretation 501-8?
In some engagements, government regulators prohibit indemnification or limitation of liability agreements.
Interpretation 501-9: What are exceptions where a CPA may disclose confidential information?
- Disclosure if permitted by law and authorized by the employer.
- Disclosure if required by law.
- There is a professional responsibility to disclose the info.
- Disclosure is permitted on behalf of the employer.
What is Rule 502 (Advertising and Other Forms of Solicitation)
In public practice, shall not seek to obtain clients by false, misleading, deceptive advertising or other forms of solicitation.
What is Rule 503? (Commissions and Referral Fees)?
A member in public practice may not accept a commission for recommending a product or service to a client when member or member’s firm also performs any of the following services for that client
- Audits or reviews of financial statements
- Compilations when member is independent and expects 3rd party to use information
- Examinations of prospective financial information
A member who receives a commission or referral fee must disclose acceptance or payment to the client.
What is Rule 505 (Form of Practice and Name)?
Member may practice public accounting in form of proprietorship, partnership, professional corporation and may not practice under a misleading name.
What is the ruling on a CPA in a partnership with a non-CPA?
The ruling is that the CPA is ethically responsible for all acts of the partnership and those of the non-CPA partner.
What is ‘Accredited Personal Financial Specialists (PFS)’?
CPA firm may designate itself this on its letterhead and in marketing materials if they all have the AICPA awarded designation.
