What 6 things does the AICPA Code of Ethic says?
1. Professional and moral judgement
2. Public Interest
4. Objectivity & Independence
5. Due Care
6. Scope and Nature of Services
Who is considered to be an AICPA covered member(CM)?
1. someone on an attest engagement
2. someone that can influence an engagement
3. partner or manager providing a non-attest services if >10 h
4. partner in local-lead office
5. the firm and including the employees and their benefit plan
6. entity whose operating, financial or accounting policies can be controlled from above people
If you are a covered member on a professional engagement what things you CANNOT do?
1. have a Direct or a Material Indirect interest in a client(C)
2. Be a trustee or executor that is committed to acquire a Direct or a Material Indirect in a client
3. Holding close-joint business investment Material to CM
4. Loan money TO or FROM a client, officer, director, or stockholder owning 10 % or more.
If you are a covered member on a professional engagement what things you are ALLOWED to do? (exceptions)
There are personal exception loans:
1. car loans
2. loans collateralize (FULLY) by cash in same bank
3. unpaid credit card up to $10K
4. Insurance policy loan collateralize (FULLY) by policy surrender value
5.You can accept this bank as your client if you employees have:
*fully collateralize secure loans
Is a partner who she and her family own more than 5% of clients stock considered independent?
NO!!! 1 stock is a violation for u and ur spouse and dependent
What a partner or a professional employee CANNOT do during engagement?
1.director, officer, employee or anything equivalent of management
2. Promoter, underwriter, voting trustee
3. Trustee for pension or profit-sharing trust of client
Who is considered a close relative VS immediate family?
Sibling VS spouse and dependent
Non dependent child
What can a close relative do to impair independent?
1. Be in a key position with a client
2. Has a Material financial statement in a client and you know about it
3. Can influence significantly the client
When immediate family (spouse and child) cannot impair independence?
1. If family member is not in a key position
2. if family has a benefit plan with client?????
If you, your husband, or your child have material or even immaterial interest in a client, what is this considered?
Do you have to know about it to be a violation?
NO!!! it a violation even if you don't know about it.
If a close relative (brother, sister, parents) has an indirect interest in you client. When it is a violation?
When it's material and I know about it.
Its not a violation if I don't know about it.
How to treat mutual funds?
Its a violation if its material.
Independence applies to you and your family if your working in:
2.supervise or manage attest engagement
What is Not Ok to do when you are on a non-attest engagement?(no consulting, ex bookkeeping)
1.Authorizing, executing, consummating a transaction
2.Preparing source documents
3.having custody of client's assets
4.supervising employees of the client
5.determining which recommendation to implement
6.reporting to the board in behalf of management
7.serving as your clients stock transfer agent, registrar, general counsel
What kind of problems can come up with Bookkeeping and Auditing?
1. make sure u are not auditing "your work"
What things you cannot do when you have an SEC company client?
bookkeeping, IS design, appraisals services, actuarial services, internal auditing, management and HRS, broker/dealer, legal services, expert services (consulting), for tax services audit committee has to pre-approve it.
What is AICPA's Code of Ethics?
102: Integrity and Objectivity
201: General Standards
202 Compliance with Standards SOS
203: Accounting Principles (rule 203 GAAP departure) SOS
301: Confidential Client Information with exception
302: Contingent Fees (next card)
502: Advertising and Solicitation
503: Commissions (next card)
505:Form of Practice and Name
What's the exception for Clients Confidentiality?
to comply with 202, 203
What are the Rule 201: General Standards?
Planning and Supervision
Sufficient Relevant Date
These things are ok!!!
Contingent fees, non attest client
Referral fees is disclosed
Commisions from 3rd parties if they are disclosed and the client in non attest
Use trade name
Personal, direct, uninvited solicitation
These are NOT ok!!!
Contingent fees for tax returns
These are ok for AICPA but not for LA state board:
Self laudatory adertising
Testimonial or endorsements
What happens with the form of practice?
depends on the state for AICPA
Proprietor, partnership, Prof. Corp. Under LA law=LA State Board
Fianacial interest Violations
Violation 1: You-Spouse-Dependent have material or immaterial interest in a client-u don't have to know about it=VIOLATION
Violation 2: Siblings-Parents have material interest and you know about it
Violation 3: Mutual funds is a violation if its material