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AICPA Ethics Exam – Q&A - Guaranteed Pass
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AICPA Ethics Exam – Q&A - Guaranteed PassEthical decision-making model ✔️Ans -Step 1 Recognize the ethical
issue
Step 2 Gather critical facts
Step 3 Identify Stakeholders
Step 4 Consider Alternatives
Step 5 Consider the effect of Stakeholders
Step 6 Consider your comfort level
Step 7 Consider rules, regulations, and laws
Step 8 Make a decision
Step 9 Document efforts
Step 10 Evaluate the outcome
The accounting profession ✔️Ans -1. In Public Practice-public
accounting practice
2. In Business-not for profit or private firm
Professional and regulatory bodies ✔️Ans -1. American Institute of
Certified Public Accountants (AICPA)-In fulfilling its mission, the AICPA
works with state CPA societies and state accountancy boards, giving
priority to those areas where public reliance on CPA skills is most
significant.
-The AICPA Professional Ethics Executive Committee (PEEC) promulgates
and enforces ethics and independence rules that apply to all members.
2. U.S. Securities and Exchange Commission (SEC)-Its mission is to improve
the professional performance of public company auditors to ensure that
financial statements are presented fairly and have credibility.
3. Public Company Accounting Oversight Board (PCAOB)-The Sarbanes-
Oxley Act of 2002 created and authorized the PCAOB to establish auditing
and related attestation, quality control, ethics, and independence standards
for public company auditors. The SEC oversees the PCAOB's activities.
4. U.S. Government Accountability Office (GAO)-The GAO issues ethics and
independence rules that apply to engagements performed under generally
accepted government auditing standards (GAGAS). These governmental
standards are published as Government Auditing Standards, commonly
referred to as the "Yellow Book."
,5. U.S. Department of Labor (DOL)-Auditors of employee benefit plans that
file reports with the DOL should be aware of the DOL interpretive bulletin
on independence.
6. U.S. Department of the Treasury/Internal Revenue Service (IRS)-The
Internal Revenue Code (IRC) authorizes the Secretary of the Treasury to set
rules and regulations necessary to enforce the U.S. tax laws. Treasury
Department Circular No. 230 governs federal tax practice before the IRS by
CPAs, enrolled agents, attorneys, and actuaries and the IRS Office of
Professional Responsibility (OPR) that enforces these regulations.
7. State boards of accountancy-State boards of accountancy
Code of Conduct ✔️Ans -When something is "ethical," it is in accordance
with the accepted principles of right and wrong governing the conduct of a
person or the members of a profession.1
-In general, a code of professional conduct describes the basic tenets of
ethical conduct in a profession, whether accounting, medicine, or
engineering. Professions that serve the public interest adopt a code of
conduct to help maintain public confidence in the profession.
The AICPA Code of Professional Conduct (the code)
1. Membership in the AICPA is voluntary. By accepting membership, a
member assumes an obligation of self-discipline above and beyond the
requirements of laws and regulations.
2. The principles of the Code of Professional Conduct of the AICPA express
the profession's recognition of its responsibilities to the public, to clients,
and to colleagues. They guide members in the performance of their
professional responsibilities and express the basic tenets of ethical and
professional conduct. The principles call for an unswerving commitment to
honorable behavior, even at the sacrifice of personal advantage.
3. The first two principles in the code, "Responsibilities" and "The Public
Interest," say, in part, that "[m]embers of the AICPA have responsibilities to
all those who use their professional services." The code also notes that "a
distinguishing mark of a profession is acceptance of its responsibility to the
public." The public interest is defined as "the collective well-being of the
community of people and institutions the profession serves."
4. These principles also indicate, in part, that "members should exercise
sensitive professional and moral judgments in all their activities." Members
should also act in a manner that serves the public interest and honors the
,public trust that is bestowed upon them as a member of the accounting
professi
Principles of Professional Conduct ✔️Ans -The Principles of Professional
Conduct (ET sec. 0.300)
1. Responsibilities-In carrying out your professional responsibilities, you
should exercise sensitive professional and moral judgment.
2. Public Interest-You should act in a way that will serve the public interest,
honor the public trust, and demonstrate your commitment to
professionalism.
3. Integrity-To maintain and broaden public confidence, you should
perform all professional responsibilities with the highest sense of integrity.
4. Objectivity and Independence-You should maintain objectivity and be
free of conflicts of interest in discharging your professional duties. If you
work for a public accounting firm that provides audit and other attestation
services, you should be independent in fact and appearance.
5. Due Care- You should observe the profession's technical and ethical
standards, strive continually to improve competence and the quality of
services, and discharge professional responsibility to the best of your
ability. When performing audits or other attest services, due care requires
CPAs to exercise professional skepticism.
6. Scope and Nature of Services-As a member in public practice, you should
observe the principles of the Code of Professional Conduct in determining
the scope and nature of services to be performed.
Rules of conduct
1. Part 1: Members in public practice:
1.100 — Integrity and Objectivity
1.200 — Independence
1.300 — General Standards
1.310 — Compliance with Standards
1.320 — Accounting Principles
1.400 — Acts Discreditable
1.500 — Fees and Other Types of Remuneration
1.600 — Advertising and Other Forms of Solicitation
1.700 — Confidential Information
1.800 — Form of Organization and Name
2. Part 2: Members in business:
, 2.100 — Integrity and Objectivity
2.300 — General Standards
2.310 — Compliance With St
Conceptual framework ✔️Ans -You will find the following three
conceptual frameworks in the code:
1. Conceptual Framework for Members in Public Practice, which applies to
all rules in Part 1 of the code (except independence).
2. Conceptual Framework for Independence, which applies to the
independence rule, which is addressed in Part 1 of the code.
3. Conceptual Framework for Members in Business, which applies to all
rules in Part 2 of the code.
The conceptual framework includes the following key terms:
1. Threats. Relationships or circumstances that could compromise a
member's compliance with the rules. These include adverse interest,
advocacy, familiarity, management participation, self-interest, self-review,
and undue influence. See the appendix "Conceptual Framework for
Members in Public Practice" for detailed definitions of each threat.
2. Acceptable level. A level at which a reasonable and informed third party
who is aware of the relevant information would be expected to conclude
that a member's compliance with the rules is not compromised.
3. Safeguard. May partially or completely eliminate a threat or diminish the
influence of a threat. To be effective, safeguards should eliminate the threat
or reduce it to an acceptable level. See the appendix "Conceptual
Framework for Members in Public Practice" for a full description and list of
safeguards.
You should use the following process when applying the framework
1. Identify threat(s) to compliance with one or more rules.
2. Evaluate whether the threat (or threats in the aggregate, if applicable) is
significant.
-If threat is not significant — Stop, no further consideration is needed.
-If threat is significant — Proceed to next step.
3. Identify and apply safeguards.
-If safeguard(s) would eliminate the threat or reduce the threat to an
acceptable level, proceed with professional servic
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