C Referral fees Any member who accepts a referral fee for recommending or

C referral fees any member who accepts a referral fee

This preview shows page 25 - 26 out of 55 pages.

C. Referral fees Any member who accepts a referral fee for recommending or referring any service of a CPA to any person or entity or who pays a referral fee to obtain a client shall disclose such acceptance or payment to the client. Rule 505 Form of Organization and Name A member may practice public accounting only in a form of organization permitted by law or regulation whose characteristics conform to resolutions of Council. A member shall not practice public accounting under a firm name that is misleading. Names of one or more past owners may be included in the firm name of a successor organization. A firm may not designate itself as “Members of the American Institute of Certified Public Accountants” unless all of its CPA owners are members of the Institute. (AICPA, Code of Professional Conduct, Sections 100 through 500) Rule 101 , Independence, is similar to the Principle but states that AICPA standards must be followed. Independence is discussed in greater detail in the next section. Rule 102 , Integrity and Objectivity, is also similar to the Principles but adds that it is wrong to present information incorrectly when the CPA knows it is wrong, and that it is wrong to subordinate judgment to others. This simply means that a CPA should not let someone else make a decision that is his or her responsibility. Rule 201 , titled General Standards, provides more information about what it means to perform work using technical competence and due professional care. The guidance of Rule 201 extends to both the individual and the firm, stating that the member or the member’s firm must have the skills and knowledge to perform the engagement. Further, “due professional care” is required including the planning and supervision of the work as well as obtaining sufficient support in the form of evidence or data to support the auditor’s conclusion. Due professional care means performing services with competence and a questioning attitude. Due professional care is discussed again in Chapter 4 relating to legal concepts. Rule 202 , Compliance with Standards, basically states that the CPA must look to any professional standards that are available in performing his or her work. Rule 203 , Accounting Principles, states that the financial statements must be in conformity with GAAP in order for the auditor to state that in the audit report. The auditor cannot say that there are not any material modifications that should be made to make the financial statements in conformity with GAAP unless that is actually the case. There is an exception for the situation in which complying with GAAP would make the financial statements misleading, but the company that prepares the financial statements must explain the circumstances and justify why GAAP would make the financial statements misleading. This exception does not exist when performing an audit of financial statements for a public company under PCAOB standards. GAAP can be U.S. accounting standards, or (for companies that
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