SU 1 Ethics & Pro Responsibilities

Question 1

Tax return preparers

Answer 1

Indiv IT
Corp IT
Pship return
DISC return
S corp return
Estate taxes
Employment tax
Excise tax
Gift tax

Question 2

Non signing tax return

Answer 2

prepares all or substantial part of return or claim for refund
preparer who provide advice substantial part of return
insubstantial part-

Question 3

Penalties for taking undisclosed position w/o reasonable belief that causes understatement

Answer 3

1k or 50% of income to be derived

no penalty if acted in good faith, reasonable cause exists

Question 4

Penalties for negligence

Answer 4

failure to make reasonable attempt to comply w/ provision of internal rev law or exercise ord & reasonable care
willful/reckless
penalty is greater of 5k or 50% of income to be derived

Question 5

Disclosure of TP info penalty

Answer 5

$250 per disclosure
max of 10k/year
convicted of knowingly or recklessly disclosing, guilty of misdemeanor subject to 1k & up to 1 year in prison

Question 6

Professional Ethics Division

Answer 6

ethics violations

sanctions

Question 7

Joint Trial Board

Answer 7

acquit, admonish (censure), suspend, expel member
discipline, remedial, corrective action
CPA Letter publishes info about suspension/expulsion
ppl can appeal to full trial board (this decision is conclusive)

Question 8

Automatic Expulsion by JTB

Answer 8

commit felony
willful failure to file tax return
file fraudulent tax return on member or client’s behalf
aid in preparation of fraudulent tax return for client
CPA certificate revoked by any govt agency

Question 9

Expulsion

Answer 9

doesn’t prevent practice of public accounting

need state issued license to practice

Question 10

Joint Ethics Enforcement Program

Answer 10

AICPA & state societies refer ethics complaint to AICPA or state society
handles matters of national concern, 2 or more states, matters in litigation
promotes cooperation between ethics committees of AICPA & state societies

Question 11

SEC

Answer 11

injunction to stop future violation of securities laws
conduct admin proceedings (quasi-judicial)
-can result in suspension/revocation of right to practice before SEC
civil penalties

Question 12

When does SEC impose sanctions or suspensions?

Answer 12

Sanctions

• lacks qualification to represent other
• lacks character/integrity
• unethical/unprofessional conduct
• willfuly violated,aided, abetted violation of securities laws (rules/regulations)

Suspension

• felony conviction
• revocation/suspension of license to practice
• permanently enjoined from violation of fed securities acts

Question 13

PCAOB

Answer 13

rule making authority
annually inspects firms that audit > 100 issuers
tri annually inspects firms that audit 100 or less issuers

Question 14

PCAOB inspections

Answer 14

attestation engagements
quality control
inspection report includes firms response
-firm has 12 months to correct reported weaknesses

Question 15

PCAOB power

Answer 15

same investigatory scope as SEC 
can request SEC issue subpoenas
can de register uncooperative firms
can't issue injunctions
admin proceedings

suspend revoke firm’s registration or seek dissociation of person from firm, suspend (temp/perm) firm’s registration, max penalty of 15M