Ch. 3
Order by
46 terms
Terms | Definitions |
|---|---|
 what ethical theory states that what is ethical is the action that achieves the greatest good for the greatest number of people? | the utilitarian theory |
| what ethical theory focuses on evaluating actions based on the fundamental rights of the parties involved? | rights theory |
| according to "rights theory" are all rights equal? explain: | no: in the hierarchy or rights higher order rights take precedence over lower |
| what rights include the right to life, autonomy, and human dignity? | highest-order rights |
| what rights include the rights granted by the government (civil, legal, and property rights)? | 2nd-order rights |
| what rights include social rights (right to higher education, good health care, and to earn a living)? | 3rd-order rights |
| what rights are related to one's nonessential interest (right to be rich, play golf, dress weird) | 4th-order rights |
| what was made up of a set of principles that provide the basis for the rules of conduct? | the AICPA's Code of Professional Conduct |
| what should auditors look to for professional guidance? | the AICPA's principles of professional conduct |
| list the AICPA's 6 principles of professional conduct: | 1. Responsibilities 2. public interest 3. integrity 4. objectivity and independence 5. due care 6. scope and nature of services |
| in carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities | responsibilities |
| members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism | public interest |
| to maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity | integrity |
| a member should maintain objectivity and be free of conflicts in discharging professional responsibilities. a member in public practice should be independent in fact and in appearance when providing auditing and other attestation services | objectivity and independence |
| a member should observe the profession's technical and ethical standards, strive continuously to improve competence and the quality of services, and discharge professional responsibility to the best of the members ability | due care |
| a member in public practice should observe the principles of the code of professional conduct in determining that scope and nature of services to be provided | scope and nature of services |
| specific guidelines that reflect the broad principles of the profession | rules of conduct |
| a member in public practice shall be independent in the performance of professional services as required by standards promulgated by bodies designed by council | Rule 101 - AICPA rules of conduct >independence |
| a member in public practice shall not disclose any confidential client information without the specific consent of the client | Rule 301 - confidential client information |
| a member who performs auditing, review, compilation, consulting, tax or other professional service shall comply with standards promulgated by bodies designated by council | rule 202 - compliance with standards |
| a member should not approve any statements that do not follow Generally Accepted Accounting Principles, also known as GAAP, according to the AICPA Code of Professional Conduct. CPAs also cannot lie about being unaware if changes are made to a financial statement to comply with GAAP. | rule 203 - accounting principles |
| A member in public practice shall not Perform for a contingent fee any professional services for, or receive such a fee from a client for whom the member or the member's firm performs, an audit or review of a financial statement; or a compilation of a financial statement when the member expects, or reasonably might expect, that a third party will use the financial statement and the member's compilation report does not disclose a lack of independence; or an examination of prospective financial information; or Prepare an original or amended tax return or claim for a tax refund for a contingent fee for any client. The prohibition in (1) above applies during the period in which the member or the member's firm is engaged to perform any of the services listed above and the period covered by any historical financial statements involved in any such listed services. | rule 302 - contingent fees |
| A member in public practice shall not seek to obtain clients by advertising or other forms of solicitation in a manner that is false, misleading, or deceptive. Solicitation by the use of coercion, over-reaching, or harassing conduct is prohibited. | rule 502 - advertising and other forms of solicitation |
| an individual on the attestation engagement team, an individual in a position to influence the attestation engagement, or a partner in the office in which the lead attestation engagement partner primarily practices in connection with the attestation engagement | covered member |
| a covered member's immediate family is also subject to what? | rule 101 (independence) and its interpretations, with some exceptions |
| a financial interest owned directly by, or under the control of, an individual or entity or beneficially owned through an investment vehicle, estate, or trust when the beneficiary controls the intermediary or has the authority to supervise or participate in the intermediary's investment decisions | direct financial interest |
| occurs when the beneficiary neither controls the intermediary nor has the authority to supervise or participate in the intermediary's investment decisions | indirect financial interest |
| no partner or professional employee of the CPA firm (whether a covered member or not) can have more than how much of the attest client's outstanding equity securities or other ownership interests? | 5% |
| an audit partner who is not otherwise connected with the audit client or involved in the conduct of the audit engagement who provides an independent review of the audit engagement prior to the issuance of the audit opinion | concurring partner |
| information obtained during the conduct of an audit related to a client's business or business plans; the auditor is prohibited from communicating confidential information except in very specific instances defined by the code or with the client's specific authorization | confidential information |
| a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specific finding or result is attained or in which amount the fee otherwise depends on the finding or results of such services | contingent fee |
| a situation in which moral duties or obligations conflict; one action is not necessarily the correct action | ethical dilemma |
| a situation in which an individual is morally or ethically required to do something that conflicts with his or her immediate self-interest | ethical problem |
| being objective and unbiased while preforming professional services. it requires being independent in fact and in appearance | independence |
| adherence to a moral or ethical code the results in the state of being unimpaired | integrity |
| a mental attitude that auditors should maintain while performing engagements. the auditor should have an impartial, unbiased attitude and avoid conflict of interest situations that could hinder the auditor's ability to perform audit duties objectively | objectivity |
| information about a client that cannot be subpoenaed by a court of law to be used against a client; it allows no exceptions to confidentiality | privileged communication |
| detailed guidance to assist the CPA in applying the broad principles contained in the code; the rules have evolved over time as members of the profession have encountered specific ethical dilemmas in complying with the principles of the code | rules of conduct |
| those parties who have a vested interest in, or are effected by the decision resulting from and ethical problem or dilemma | stakeholders |
| rule 101 | independence |
| rule 102 | integrity and objectivity |
| rule 202 | compliance with standards |
| rule 203 | accounting principles |
| rule 301 | confidential client information |
| rule 302 | contingent fees |
| rule 502 | advertising and other forms of solicitation |
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