The code of professional conduct is meant to provide a standard of conduct for all members of the - ANSWER AICPA
Authorized to establish ethics and independence standards for auditors of public companies - ANSWER PCAO
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The code of professional conduct is meant to provide a standard of conduct for all members of the - ANSWER AICPA
Authorized to establish ethics and independence standards for auditors of public companies - ANSWER PCAOB
Code of Professional Conduct - ANSWER 1. Principles
2. Rules of Conduct
3. Interpretations of Rules of Conduct
4. Ethical Rulings
Principles - ANSWER Ideal standards of conduct. Not enforceable
Rules of Conduct - ANSWER Minimum standards of specific conduct stated as specific rules. Enforceable. Explicit rules that MUST be followed by EVERY CPA in the practice of public accounting. Not practicing must follow most, but NOT all.
Interpretations of the rules of conduct - ANSWER Interpretations of rules by AICPA Division of Professional Ethics. NOT enforceable, must justify departure. Ea interpretation based on a consensus of a committee made up principally of public accounting practioners.
Ethical Rulings - ANSWER published explanations and answers to questions about the rules of conduct submitted to the AICPA. NOT enforceable, but must justify departure. Rulings are explanations by the executive committee of professional ethics division.
Ethical Principles - ANSWER 1. Responsibilities
2. The Public Interest
3. Integrity
4. Objectivity and Independence
5. Due Care
6. Scope and Nature of Services
FIRST rule of conduct - ANSWER Independence
Independence in fact - ANSWER unbiased attitude
Independence in appearance - ANSWER result of other's interpretation of independence
Companies are required to disclose in their proxy statement or annual filings the total amount of - ANSWER audit and non audit fees paid to the CPA firm for the two most recent yrs
FOUR Categories of fees must be reported - ANSWER 1. audit fees
2. audit related fees
3. tax fees
4. all other fees
SOX requires audit committees (public companies) to be responsible for - ANSWER 1. the appt
2. compensation
3. and oversight work of the auditors
the audit committee is the - ANSWER client for public companies and not management
Ownership Interest - ANSWER prohibits ownership in audit clients by those persons who can influence the audit.
rules prohibit ownership by any covered person and their immediate family, including - ANSWER 1. members of the engagement team
2. those in chain of command that can influence audit decision
3. partners and mangers that provide more that 10 hours nonaudit services to client
4.partners in the office of the partner primarily responsible for audit
Indirect Investment in client's company - ANSWER is prohibited, but only if the amount is material to the auditor. ex. grandparent or mutual fund investment
direct investment in the client's company - ANSWER ownership of stock or other equity shares by members or their immediate family
general lending procedures - ANSWER generally loans btwn CPA and audit client are prohibited. Exceptions: Car loans, loans fully collateralized by cash deposits, unpaid credit cards not exceeding $10K, existing home mortgages, immaterial loans, other fully collateralized loans.
Employment of Immediate and Close Family Members - ANSWER spouse, spousal equivalent, dependent can not hold a key position that allows them to influence the accounting functions
CPA can do auditing and bookkeeping of a - ANSWER private company
Bookkeeping Rules - ANSWER 1. client excepts full responsibility for financial statements
2. CPA cant be an employee or have custody of assets
3. CPA must follow GAAS and GAAP
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