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AICPA Final Exam – Questions & Detailed Solutions
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AICPA Final Exam – Questions & Detailed Solutions4 parts Correct Ans - Ethical principles
Rules of conduct
Interpretations
Ethical rulings
Ethical principles Correct Ans - Ideal standards of ethical conduct
stated in philosophical terms:
Responsibilities
The public interest
Integrity
Objectivity and independence
Due care
Scope and nature of services
Though not enforceable, the burden of proof on CPA for noncompliance
rules of conduct (100-500) Correct Ans - Minimum standards of
ethical conduct stated as specific rules
These are enforceable
Other organizations' rules of conduct can be less or more restrictive than
AICPA's:
SEC
TSBPA
For frequent, recurrent questions about a specific rule of conduct
Though not enforceable, a CPA must justify departure
Prepared by AICPA Division of Professional Ethics
ethical rulings Correct Ans - Explanations to specific important
questions about rules of conduct
Based on questions submitted to AICPA by practitioners
Not enforceable, but a CPA must justify departure
What Should You Do When AICPA Rules of Conduct Differ from SEC, TSBPA?
Correct Ans - Follow whichever is more restrictive
If you're not sure about an ethics issue, call the TSBPA
, AICPA Also Recently Adopted a "Covered Person" Independence
Perspective Correct Ans - Previous AICPA rules took a "firm wide"
Independence perspective
Intended to modernize rules for auditor independence regarding:
Investments in audit clients
Employment relationships
Scope of services provided to SEC clients
Old rules were out of date and unnecessarily restrictive, given increasing
numbers of dual income families
Firm wide perspective:
Partners could not own any stock in any client company
Managers and below could not own stock of the client if they were in the
office doing the audit for the client
For example: Joe Abston, manager in Honolulu office, transferred to Dallas
office and had to sell Dr Pepper
covered persons Correct Ans - The audit engagement team
members
Persons within the chain of command in relation to the audit team
[including concurring partner, Office partner in charge [PIC], regional
partner]
Partners and managers providing at least 10 hours of non-audit services to
the audit client [SEC position]
Other partners in the office of the engagement partner
The firm and its employee benefit plans
An entity controlled by a covered member
Safe harbor provision for unsolicited gifts or a bequest that would have
impaired independence: SEC 30 days
immediate family members Correct Ans - spouse, spousal
equivalent, or dependent
These relationships are considered ascribed to the covered person
independence rule 101 Correct Ans - is impaired if a covered party
has a direct financial interest in a client, or a material indirect financial
interest in a client
A direct interest is ownership of equity shares
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