Contents

Ethics Background. 10

Morals. 10

What is Ethics?. 10

The Relationship of Morals and Ethics. 11

Illustrative Examples of Ethics. 12

Professional Ethics. 14

Legal versus Ethical 14

Why Should We Study Professional Ethics?. 14

Ethical Core Foundations for CPAs. 16

Other Ethical Foundations of the CPA Profession. 17

Review Questions. 18

Ethical Reasoning. 19

Case Studies – Threats and Safeguards. 20

Ethical Dilemmas. 22

Case Studies of Ethical Lapses. 22

Enron. 23

The Travel Expense Department. 24

Motivations of Ethical Lapses. 25

Review Questions. 27

The Florida State Board of Accountancy Rules. 28

Summary of Changes to The Florida State Board of Accountancy Rules and Florida Statutes in 2016 and 2017 28

61H1-20.001 Definitions. 29

61H1-20.002 “Attest as an Expert in Accountancy to the Reliability or Fairness of Presentation” or “Expression of Opinion.”. 29

61H1-20.003 Client. 30

61H1-20.004 Enterprise. 30

61H1-20.005 Financial Statements. 30

61H1-20.0051 Assembled Financial Statements. 30

61H1-20.0052 Offer to Perform or Perform Services Involving Assembled Financial Statements. 30

61H1-20.0053 Standards for Assembled Financial Statements. 31

61H1-20.007 Generally Accepted Accounting Principles. (Repealed). 33

61H1-20.008 Generally Accepted Auditing Standards. (Repealed) 33

61H1-20.009 Standards for Accounting and Review Services. (Repealed) 33

61H1-20.0092 Government Auditing Standards. (Repealed). 33

61H1-20.0093 Rules of the Auditor General. 33

61H1-20.0095 Standards for Consulting Services. (Repealed) 34

61H1-20.0096 Services for Tax Practice. (Repealed). 34

61H1-20.0097 Standards for Personal Financial Planning. (Repealed). 34

61H1-20.0098 Standards for Business Valuations. (Repealed) 34

61H1-20.0099 Standards for Attestation Engagements. (Repealed). 34

61H1-20.010 Engagement. 34

61H1-20.013 Employee. 34

61H1-20.016 Non-CPA Shareholders, Partners, and Members. 35

61H1-21.001 Independence. 35

STANDARDS FOR DETERMINING INDEPENDENCE IN THE PRACTICE OF PUBLIC ACCOUNTANCY FOR CPAS PRACTICING PUBLIC ACCOUNTANCY IN THE STATE OF FLORIDA.. 36

Independence Case Study. 50

61H1-21.002 Integrity and Objectivity. 50

Integrity and Objectivity Case Study. 51

61H1-21.003 Commissions or Referral Fees. 51

61H1-21.005 Contingent Fees. 52

Contingent Fee Case Study. 53

61H1-21.006 Communication with Client of Another Certified Public Accountant. 53

61H1-22.001 Competence (General Standards). 53

General Standards Case Study. 53

61H1-23.001 Confidential Client Information. 54

61H1-23.002 Records Disposition Responsibility. 54

61H1-24.001 Advertising. 55

Advertising Case Study. 56

61H1-24.002 Solicitation. (Repealed). 57

61H1-25.001 Responsibility for Other Persons. 57

61H1-26.001 Form of Practice and Name-Shared Office Space. 57

61H1-26.002 Minimum Capitalization or Adequate Public Liability Insurance for Florida Firms with the Exception of a Sole Proprietorship. 58

61H1-26.003 Licensure of Florida Certified Public Accountant Firms. 60

61H1-26.004 Changes by Firms. 60

61H1-26.005 Address of Record. 61

61H1-33.001 Certified Public Accountants Required to Comply with this Chapter. 61

61H1-33.002 Organization and Administration. 61

61H1-33.003 Continuing Professional Education. 62

61H1-33.0031 Continuing Professional Education/Ethics. 64

61H1-33.0032 Board Approval of CPA Ethics Continuing Education by Providers. 65

61H1-33.0033 Obligations of CPA Ethics Course Continuing Education Providers. 66

61H1-33.0034 Evaluation of CPA Ethics Course Providers. 67

61H1-33.00341 Duration of CPA Ethics Course Provider Status. 67

61H1-33.00342 CPA Ethics Courses – Standards for Approval of Courses. 67

61H1-33.0035 Continuing Professional Education/Governmental Auditing. 68

61H1-33.006 Inactive or Delinquent Florida Certified Public Accountants Who Desire to Become Active Licensees. 69

61H1-33.0065 Exemption from Renewal Requirements for Spouses of Members of the Armed Forces of the United States. 70

61H1-34.001 Preparation of Financial Statements by Persons Other than Certified Public Accountants or Inactive Certified Public Accountants. 70

61H1-34.002 Notice to Public by Non-Licensed Persons. 71

61H1-36.002 Return of Certificates or Licenses. 71

61H1-36.003 Time for Payment of Civil Penalties. (Repealed) 71

61H1-36.004 Disciplinary Guidelines; Range of Penalties; Aggravating and Mitigating Circumstances. 71

61H1-36.005 Citations. 78

61H1-36.0055 Minor Violation, Notice of Non-Compliance. 79

61H1-36.006 Mediation. 80

61H1-39.001 Definitions. 80

61H1-39.002 Peer Review Program Standards. 81

61H1-39.003 Peer Review Administering Entities. 81

61H1-39.004 Peer Review Oversight Committee Composition and Responsibilities. 82

61H1-39.005 Compliance with Peer Review Requirements. 83

Review Questions. 84

Chapter 455 Florida Statutes. 85

Failure to Report to the Board Case Study. 92

Chapter 473 Florida Statutes. 99

Overall Case Study – 61H1 F.A.C. and Chapters 455 and 473 F.S. 119

Review Question. 121

The AICPA Code of Professional Conduct. 122

About the Code. 122

Preface. 123

Part 1 – Members in Public Practice. 124

Rule 1.100 Integrity and Objectivity. 126

Case Study – Married Tax Clients Divorcing. 127

1.130 Preparing and Reporting Information. 128

Case Study – Bernard Madoff Investment Securities LLC. 129

Case Study – Phar-Mor. 131

1.200 - Independence. 133

Review Questions. 138

Rule 1.300—General Standards Rule. 139

1.310 Compliance with Standards Rule. 140

Case Study – Peer Review Discoveries. 140

1.320 Accounting Principles Rule. 140

1.400.001 Acts Discreditable Rule. 141

1.510.001 — Contingent Fees Rule. 142

1.520.001—Commissions and referral fees Rule. 144

1.600.001 —Advertising and other forms of solicitation. 145

1.700.001— Confidential client information rule. 146

1.800.001—Form of organization and name rule. 147

Review Questions. 148

Part 2 – Members in Business. 149

2.100.001 – Integrity and Objectivity Rule. 152

2.130.030 Obligation of a Member to His or Her Employer’s External Accountant. 154

2.170.010 – Pressure to Breach the Rules. 154

Case Study – Fair Finance. 154

2.300.001 — General standards rule. 155

2.310.001—Compliance with standards rule. 156

2.320.001—Accounting principles rule. 156

Case Study - The Company with Excess Reserves. 156

Case Study - The Company with Undisclosed/Unrecorded Contingencies. 157

2.400.001 Acts Discreditable Rule. 158

2.400.070 Confidential Information from employment or volunteer activities. 159

Part 3 – Other Members. 160

3.400.001 - Acts discreditable rule. 160

3.400.070 Confidential Information from employment or volunteer activities. 160

Glossary. 162

Index. 163

Answers to Review Questions. 164

CPE Exam.. 169