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journal article
Enforcement of the Code of Ethics: A SurveyThe Accounting Review
Vol. 47, No. 1 (Jan., 1972)
, pp. 1-10 (10 pages)
Published By: American Accounting Association
https://www.jstor.org/stable/244561
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Journal Information
The Accounting Review is the premier journal for publishing articles reporting the results of accounting research and explaining and illustrating related research methodology. The scope of acceptable articles embraces any research methodology and any accounting-related subject. The primary criterion for publication in The Accounting Review is the significance of the contribution an article makes to the literature.
Publisher Information
The American Accounting Association is the world's largest association of accounting and business educators, researchers, and interested practitioners. A worldwide organization, the AAA promotes education, research, service, and interaction between education and practice. Formed in 1916 as the American Association of University Instructors in Accounting, the association began publishing the first of its ten journals, The Accounting Review, in 1925. Ten years later, in 1935, the association changed its name to become the American Accounting Association. The AAA now extends far beyond accounting, with 14 Sections addressing such issues as Information Systems, Artificial Intelligence/Expert Systems, Public Interest, Auditing, taxation (the American Taxation Association is a Section of the AAA), International Accounting, and Teaching and Curriculum. About 30% of AAA members live and work outside the United States.
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Chapter3: Professional Ethics
All applicable questions are available with McGraw-Hill’s Connect™ Accounting.
(K)
3-32.
Multiple Choice Questions
Select the best answer for each of the following. Explain the reasons for your selection.
a.
Which of the following is not a covered thành viên for an attest engagement under Rule 101 of the AICPA Code of Professional Conduct?
(1)
An individual assigned to the attest engagement.
(2)
A partner in the office of the partner in charge of the attest engagement.
(3)
A manager who is in charge of providing tax services to the attest client.
(4)
A partner in the national office of the firm that performs marketing services.
LO 5
b.
Which of the following is not prohibited by the AICPA Code of Professional Conduct?
(1)
Advertising in newspapers.
(2)
Payment of commission to obtain an audit client.
(3)
Acceptance of a contingent fee for a review of financial statements.
(4)
Engaging in discriminatory employment practices.
LO 4
c.
In which of the following situations would a public accounting firm have violated the AICPA Code of Professional Conduct in determining its fee?
(1)
A fee is based on whether or not the public accounting firm's audit report leads to the approval of the client's application for bank financing.
(2)
A fee is to be established a later date by the Bankruptcy Court.
p. 100(3)
A fee is based upon the nature of the engagement rather than upon the actual time spent on the engagement.
(4)
A fee is based on the fee charged by the client's former auditors.
LO 4
d.
A public accounting firm would least likely be considered in violation of the AICPA independence rules in which of the following instances?
(1)
A partner's checking account, which is fully insured by the Federal Deposit Insurance Corporation, is held a financial institution for which the public accounting firm performs attest services.
(2)
A manager of the firm donates services as vice president of a charitable organization that is an audit client of the firm.
(3)
An attest client owes the firm fees for this and last year's annual engagements.
(4)
A covered thành viên's dependent son owns stock in an attest client.
LO 5
e.
Which of the following is implied when a CPA signs the preparer's declaration on a federal income tax return?
(1)
The return is not misleading based on all information of which the CPA has knowledge.
(2)
The return is prepared in accordance with generally accepted accounting principles.
(3)
The CPA has audited the return.
(4)
The CPA maintained an impartial mental attitude while preparing the return.
LO 4
f.
The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of the client. This rule may preclude a CPA from responding to an inquiry made by:
(1)
An investigative body toàn thân of a state CPA society.
(2)
The trial board of the AICPA.
(3)
A CPA-shareholder of the client corporation.
(4)
An AICPA quality review body toàn thân.
LO 4
g.
Which of the following is most likely to be a violation of the AICPA rules of conduct by Bill Jones, a sole practitioner with no other employees?
(1)
Jones performs consulting services for a percentage of the client's savings; these are the only services provided for the client.
(2)
Jones names his firm Jones and Smith, CPAs.
(3)
Jones advertises the services he provides in an Internet set of telephone “yellow pages.”
(4)
Jones, without client consent, makes available working papers for purposes of a peer review of his practice.
LO 4
h.
Bill Adams, CPA, accepted the audit engagement of Kelly Company. During the audit, Adams became aware of his lack of competence required for the engagement. What should Adams do?
(1)
Disclaim an opinion.
(2)
Issue an adverse opinion.
(3)
Suggest that Kelly Company engage another CPA to perform the audit.
(4)
Rely on the competence of client personnel.
LO 4
i.
Which of the following nonattest services may be performed by the auditors of a public company?
(1)
Internal audit outsourcing.
(2)
Tax planning for all company officers.
(3)
Bookkeeping services.
(4)
Preparation of the company's tax return.
LO 6
j.
In providing nonattest services to an attest client, a CPA is allowed to perform which of the following functions?
(1)
Maintaining custody of the client's securities.
(2)
Training client employees.
(3)
Supervising client employees.
(4)
Acting as the third approver of large client expenditures.
LO 5
p. 101k.
Rule 202—Compliance with Standards, requires CPAs to adhere to all of the following applicable standards, except:
(1)
Statements on Standards for Consulting Services.
(2)
Statements on Auditing Standards.
(3)
Statements on Standards for Attestation Engagements.
(4)
Statements on Responsibilities in Tax Practice.
LO 4
l.
Which of the following provisions is not included in The Institute of Internal Auditors Code of Ethics?
(1)
Performance of work with honesty, diligence, and responsibility.
(2)
Prudence in the use and protection of information acquired in the course of their duties.
(3)
Use of appropriate sampling methods to select areas for audit.
(4)
Continual improvement in proficiency and effectiveness and the quality of services provided.
LO 7
(AICPA, adapted)
3-33.
Simulation
The firm of Wilson and Wiener (WW), CPAs, has had requests from a number of clients and prospective clients to perform various types of services. Please reply as to whether the appropriate independence rules (AICPA and/or PCAOB) allow the following engagements using the following key:
A—Allowable, given these facts.
N—Not allowable, given these facts.
(If both AICPA and PCAOB rules apply and one of them does not allow the services, answer N.)
LO 4, 6
(K)
p. 1023-34
Donald Westerman is president of Westerman Corporation, a nonpublic manufacturer of kitchen cabinets. He has been approached by Darlene Zabish, a partner with Zabish and Co., CPAs, who suggests that her firm can design a payroll system for Westerman that will either save his corporation money or be không lấy phí. More specifically, Ms. Zabish proposes to design a payroll system for Westerman on a contingent fee basis. She suggests that her firm's fee will be 25 percent of the savings in payroll for each of the next four years. After four years Westerman will be able to keep all future savings. Westerman Corporation's payroll system costs currently are approximately $200,000 annually, and the corporation has not previously been a client of Zabish.
LO 4
Westerman discussed this offer with his current CPA, Bill Zabrinski, whose firm annually audits Westerman Corporation's financial statements. Zabrinski states that this is a relatively simple task, and that he would be willing to provide the service for $30,000.
Required:
a.
Would Zabish violate the AICPA Code of Professional Conduct by performing the engagement?
b.
Would Zabrinski violate the AICPA Code of Professional Conduct by performing the engagement?
c.
Now assume that Westerman has indicated to Zabrinski that he is leaning toward accepting Zabish's offer. Zabrinski then offers to provide the service for 15 percent of Westerman's savings for the next three years. Would performing the engagement in accordance with the terms of this offer violate the AICPA Code of Professional Conduct?
d.
Now go back to the original information (do not consider Zabrinski's 15 percent offer in part c). If Westerman Corporation was a public company (“an issuer”), would Zabish violate PCAOB standards by performing the engagement?
e.
Now go back to the original information (do not consider Zabrinski's 15 percent offer in part c). If Westerman Corporation was a public company (“an issuer”), would Zabrinski violate PCAOB standards by performing the engagment?
3-35.
The firm of McGraw and West, CPAs, has two offices, one in Phoenix and one in San Diego. The firm has audited the Cameron Corporation out of its Phoenix office for the past five years. For each of the following independent cases, which occurred during the year under audit, indicate whether the independence of either (a) the CPA involved or (b) the firm would be impaired.
LO 5
a.
Mary McGraw, a partner in the San Diego office, fell wildly in love with Bill Smith, the treasurer for Cameron Corporation. They were married in Las Vegas. During the week, McGraw still lives in San Diego and works in that office, while Bill Smith lives in Phoenix, working for Cameron. On weekends they commute to their home in Yuma. Mary does not participate in the engagement.
b.
Jim West is the father of Will West, a Phoenix partner. Jim West has a material investment in Cameron. Will West is unaware of his father's investment, but does participate in the engagement.
c.
Bill Johnson, a senior in the San Diego office, has a material investment in the capital stock of Cameron. He does not participate in the engagement.
d.
Sandra Steversen, a staff assistant in the Phoenix office, works on the Cameron audit. Her uncle works as the chief accounting officer for Cameron.
e.
Bill Adams, a senior in the Phoenix office, does not work on the Cameron audit, but owns 9 percent of Cameron's outstanding equity (common stock).
3-36.
The firm of Harwood & Toole, CPAs, has been the auditor and tax return preparer for Tucker, Inc., a nonpublic company, for several years. In the current year, the management of Tucker discharged Harwood & Toole from the audit and tax engagement because of a disagreement over a tax matter. Management of Tucker has not paid Harwood & Toole any of the current year's audit and tax fees. Another CPA firm has been hired and management of Tucker has requested that Harwood & Toole provide the following items:
LO 4
a.
Accounting records of Tucker, Inc., in the possession of Harwood & Toole.
b.
Copies of adjusting entries prepared by the staff of Harwood & Toole.
c.
A copy of Tucker's partially completed tax return prepared by the staff of Harwood & Toole.
d.
Copies of Harwood & Toole's audit working papers from prior engagements.
e.
Several consolidating entries prepared by Tucker, Inc, and reviewed by Harwood & Toole.
Required:
Indicate which of the items must be provided to management of Tucker by Harwood & Toole.
p. 1033-37.
James Daleiden, CPA, is interested in expanding his practice through acquisition of new clients. For each of the following independent cases, indicate whether Daleiden would violate the AICPA Code of Professional Conduct by engaging in the suggested practice and explain why. If more information is needed to arrive a final determination, indicate the nature of such information.
LO 4
a.
Daleiden wishes to form a professional corporation and use the name “AAAAAAAA the CPAs,” to obtain the first ad in the yellow pages of the telephone book.
b.
Daleiden wishes to prepare a one-page flyer which he will have his son stuff on the wind-shields of each car the Pleasant Valley shopping mall. The flyer will outline the services provided by Daleiden's firm and will include a $50-off coupon for services provided on the first visit.
c.
Daleiden has a thorough knowledge of the tax law. He has a number of acquaintances who prepare their own tax returns. He proposes to offer to review these returns before they are filed with the Internal Revenue Service. For this review, he will charge no fee unless he is able to identify legal tax savings opportunities. He proposes to charge each individual one-third of the tax savings he is able to identify.
d.
Daleiden and his associates audit a number of municipalities. He proposes to contact other CPAs and inform them of his interest in obtaining more of these types of audits. He offers a $500 “finder's fee” to CPAs who forward business to him.
e.
Daleiden wishes to advertise that if he is hired to perform the audit, he will discount his fees on tax services (he does intend to grant a discount).
3-38.
The firm of Bell & Greer, CPAs, has been asked to perform attest services for Trek Corporation (a nonpublic company) for the year ended December 31, Year 5. Bell & Greer has two offices: one in Los Angeles and the other in Newport Beach. Trek Corporation would be audited by the Los Angeles office. For each of the following cases, indicate whether Bell and Greer's independence is definitely impaired. If it is not definitely impaired, but might be under some circumstances, discuss those circumstances.
LO 5
a.
A partner in the Los Angeles office of Bell & Greer has been a long-time personal friend of the chief executive officer of Trek Corporation.
b.
The former controller of Trek Corporation became a partner in the Newport Beach office of Bell & Greer on March 15, Year 5, resigning from Trek Corporation on that date.
c.
A manager in the Newport Beach office of Bell & Greer is the son of the treasurer of Trek Corporation.
d.
A partner in the Los Angeles office of Bell & Greer jointly owns a cattle ranch in Montana with one of the directors of Trek Corporation. The value of the investment is material to both parties.
e.
Trek Corporation has not yet paid Bell & Greer for professional services rendered in Year 4. This fee is substantial in amount and is now 15 months past due.
3-39.
The firm of Schilling & Co., CPAs, has offices in Chicago and Green Bay, Wisconsin. Gillington Company, which has 1 million shares of outstanding stock, is audited by the Chicago office of Schilling; Welco of the Chicago office is the partner in charge of the audit. For each of the following circumstances, indicate whether the public accounting firm's independence is impaired with respect to Gillington Company.
LO 5
a.
Johnson, a partner in the Chicago office, owns 100 shares of the stock of Gillington. He has no responsibilities with respect to the Gillington audit.
b.
Gizmo, a partner in the Green Bay office, owns 600 shares of the stock of Gillington. He has no responsibilities with respect to the Gillington audit.
c.
Masterson is a staff assistant in the Green Bay office and owns 10 percent of Gillington's outstanding common stock. Masterson provides no services to Gillington and is not able to influence the engagement.
d.
Schilling, the partner in charge of the entire firm, works in the Green Bay office. He owns 100 shares of Gillington stock (market value $2 per share), but provides no services on the engagement.
e.
Gorman is a staff assistant on the audit. Gorman's mother owns shares of Gillington that are material to her net worth and of which Gorman has knowledge.
p. 1043-40.
Simulation
Gloria and Deloria, CPAs, have recently started their public accounting firm and intend to provide attestation and a variety of consulting services for their clients, which are all nonpublic. Both Ms. Gloria and Mr. Deloria have particular expertise in designing payroll and other disbursement systems. Ms. Gloria is concerned about whether any of the following services would impair their audit independence.
LO 5
a.
For each of the services in the accompanying table provide a judgment as to whether providing the service would impair attest independence. In all 12 situations, assume that management has designated a management-level individual to be responsible for overseeing the CPA's services and has established appropriate internal control. Also assume that the client is privately held and does not report to the SEC.
b.
Now assume that the 12 services are being contemplated for nonattest clients. Which of the services does the AICPA Code of Professional Conduct prohibit under this assumption?
(K)
What are the 7 threats in the aicpa code of professional conduct?
18 of the framework identify the following threats to independence: adverse interest, advocacy, familiarity, management participation, self-interest, self-review, and undue influence.What are the 6 principles of the aicpa code of professional conduct?
Additionally, all AICPA members are required to follow a rigorous Code of Professional Conduct which requires that they act with integrity, objectivity, due care, competence, fully disclose any conflicts of interest (and obtain client consent if a conflict exists), maintain client confidentiality, disclose to the ...What are the three components of the aicpa code of conduct?
COMPOSITION, APPLICABILITY, AND COMPLIANCE The Principles provide the framework for the Rules, which govern the performance of professional services by members.Which of the following is an authoritative body toàn thân that the aicpa Code of Professional Conduct authorizes to promulgate?
The Council of the American Institute of Certified Public Accountants is authorized to designate bodies to promulgate technical standards under the Rules, and the bylaws require ad- herence to those Rules and standards. Tải thêm tài liệu liên quan đến nội dung bài viết Which of the following is most likely to violate the aicpa code of professional conduct?