Chapter 4 - Professional Ethics

N companies must disclose whether or not the audit

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n Companies must disclose whether or not the audit committee includes at least one financial expert. n Employment: n The SEC has added a one year “cooling off ” period before a member of the audit engagement team can work for the client in certain key management positions. n Partner Rotation: n The Sarbanes-Oxley Act requires that the lead and concurring audit partner rotate off the audit engagement after a period of five years. n Ownership Interests:
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+ Other Rules n General Standards (Section 200): n Auditors must follow GAAS (10 standards and other) n Rule 203: do not say things are in accordance with GAAP if they are not n Responsibilities to Clients (Section 300): n Auditor-Client Confidentiality n Exceptions: n following GAAS n valid subpoena n peer review n disciplinary investigations n client permission n Use of private information for personal gain
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+ Other Rules n Other (Section 500): n No discreditable acts! n retention of client records n discrimination/harassment n failure to follow GAAS n negligence n cheating on the CPA exam n cheating on taxes (including failure to file a tax return) n Be careful in seeking to obtain clients n advertising and solicitation n no false, misleading, or deceptive actions n no coercion, over-reaching, or harassing
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+ Sanctions for Violations n AICPA Professional Ethics Division n Responsible for investigations n Decide on disciplinary actions n Levels of Disciplinary Action n Less serious offense – remedial or corrective action required n More serious offense – before Joint Trial Board n Person n suspend (for usually 2 yrs) or expel members n State board can revoke CPA certificate or license to practice n CPA firms n SEC can suspend from taking new public clients and impose fines
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+ Internal Auditors Code of ethics 1. Integrity 1.1. Shall perform their work with honesty, diligence, and responsibility.
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  • Spring '08
  • YARDLEY
  • Ethics , moral principles, Internal Auditors Code

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