Ch4review answer1

Ch4review answer1 - Chapter 4 Professional Ethics Key...

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Chapter 4 Professional Ethics Key objectives: 3. Explain why ethics is so important to the accounting profession. 4. Describe the purpose and content of the AICPA Code of Professional Conduct. 5. Understand Sarbanes–Oxley and other SEC independence requirements and other factors that influence auditor independence. 6. Apply the AICPA Code rules and interpretations on independence. 7. Know the code rules on confidentiality and contingent fees. Understand the rules on advertising and solicitation, and how changes in these rules have affected competition in the profession. 1. Importance of ethics to CPA Profession Why is ethics so important for CPAs? ( Discussion ) The need for public confidence in auditors is especially great because even though auditors are hired by the client, users are the primary beneficiaries. This "two masters" nature of accounting is much different than other professions. We sell integrity. What are the alternatives? ( Discussion ) We historically have been a highly regarded profession in terms of ethics, although recent events have at least temporarily hurt the reputation of the profession. 27
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2. Individual Ethical Issues Discussion of case on p. 80-82 of text relating to auditor responses to time pressure. ( Discussion ) Discussion of Leigh Ann Walker Case ( Discussion ) 3. AICPA Code of Professional Conduct - The AICPA code consists of four elements: Principles Ideal standards Not enforceable Rules of Conduct Specific rules of minimum conduct Enforceable Interpretations Interpret rules Not enforceable , but must justify departure Ethical Rulings Published explanations Not enforceable , but must justify departure 4. Independence - Independence is regarded as the cornerstone of the profession. Auditors should be independent in fact and appearance . As a result of the increase in stock ownership in the United
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This note was uploaded on 10/07/2011 for the course ACCOUNTING 4220 taught by Professor Brown during the Spring '11 term at UMBC.

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Ch4review answer1 - Chapter 4 Professional Ethics Key...

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