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Unformatted text preview: dicate the employment title in any
communication in which (s)he uses the CPA designation. 3. Conflicts of Interest
a. A conflict of interest may be permitted in certain circumstances if disclosure is made
to and consent is obtained from the appropriate parties.
1) However, an independence objection cannot be overcome by disclosure and
EXAMPLES – Possible Conflicts of Interest q
q Performing litigation services for the plaintiff when the defendant is a client
Providing tax or personal financial planning (PFP) services to both parties to a divorce
Suggesting that a PFP client invest in a business in which the member has an interest
Providing tax or PFP services to family members with conflicting interests
Performing consulting services for a client that is a major competitor of a company in which the member has a
significant financial interest, occupies a management position, or exercises influence
Serving on a board of tax appeals that hears matters involving clients
Providing services in connection with a real estate purchase from a client
Referring a tax or PFP client to a service provider that refers clients to the member under an exclusive arrangement
Referring a client to a service bureau in which the member or a partner in the member’s firm has a material interest EXAMPLE
A member is a director of a fund-raising organization that distributes funds to local charities that are clients (with significant
relationships with the member). If the significant relationship is disclosed and consent is received from the appropriate
parties, performance of services not requiring independence is allowed. 4. Obligations to the Employer’s External Accountant
a. 5. A member must be candid and not knowingly misrepresent facts or fail to disclose
material facts. Subordination of Member’s Judgment
a. A member and his/her supervisor may disagree about statement preparation or
recording of transactions. The member should do the following:
2) 3) The member should do nothing if the supervisor’s position is an acceptable
alternative and does not materially misrepresent the facts.
If a material misstatement would result, the member should consult the
appropriate higher level of supervisor and consider documenting relevant
If appropriate action still has not been taken, the member should consider the
c) Continuing relationship with the employer,
Obligation to communicate with third parties, and
Desirability of consulting legal counsel. Copyright © 2012 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. Duplication prohibited. www.gleim.com 13 SU 2: Professional Responsibilities EXAMPLES – Other Issues Related to Integrity and Objectivity
q q q q
q q A member has an obligation to act if a dispute with a supervisor about financial statement presentation would result
in a material misstatement.
A member lacks integrity if (s)he prematurely expresses an opinion on financial statements because of time
pressures imposed by the client.
A member is required to disclose the use of a third-party service provider when offering professional services to a
client. If the client objects, the third-party service provider may not be used.
A member must act with objectivity and integrity when providing educational services, such as teaching and research.
A member should not accept gifts or entertainment from a client unless acceptance is reasonable in the
circumstances. The nature, cost, occasion, frequency, etc., of the gift or entertainment should be considered in the
assessment of reasonableness.
A member should consider the risks to integrity and objectivity when providing services related to client advocacy. 2.4 PROFESSIONAL STANDARDS
1. General Standards – Rule 201
a. A member shall comply with the general standards and interpretations issued by
designated bodies (the PCAOB and relevant AICPA committees and boards). The
following are the general standards:
4) Undertake only those services that the member can reasonably expect to
complete with professional competence.
Exercise due professional care when performing professional services.
Adequately plan and supervise performance of professional services.
Obtain sufficient relevant data to provide a reasonable basis for conclusions in
relation to any professional service. NOTE: The following is a helpful mnemonic:
PC and Double PC. PS and obtain SuRe Data.
b. The following is an illustration of the general standards: Figure 2-3 Copyright © 2012 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. Duplication prohibited. www.gleim.com 14 SU 2: Professional Responsibilities c. Proficiency. A member must have the following: d. 1) Adequate technical training
4) Proper supervision
6) Seasoned and independent judgment
Due Professional Care
5) An auditor uses due care to plan and perform the audit and prepare the report.
An auditor should have the degree of skill c...
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- Spring '13