Contents

Learning objectives: 3

Case Study Overview.. 8

About Friehling & Horowitz CPA’s P.C. 8

Friehling & Horowitz Compensation from Bernard Madoff Investment Securities LLC. 9

The Ponzi Scheme. 9

Bernard Madoff Investment Securities LLC Investors. 10

Madoff Arrest and Sentencing. 10

Friehling & Horowitz Audit Procedures and the SEC Complaint. 10

Friehling’s Sentence. 15

Friehling’s Ethics Complaint. 15

Friehling’s Loss of CPA License. 16

The AICPA Code of Professional Conduct. 17

Preface. 17

Part 1 – Members in Public Practice. 19

Rule 1.100 Integrity and Objectivity. 23

1.130 Preparing and Reporting Information. 24

1.200 - Independence. 26

Review Questions. 31

Rule 1.300—General Standards Rule. 32

1.310 Compliance with Standards Rule. 33

1.320 Accounting Principles Rule. 34

1.400.001 Acts Discreditable Rule. 35

1.510.001 — Contingent Fees Rule. 36

1.520.001—Commissions and referral fees Rule. 37

1.600.001 —Advertising and other forms of solicitation. 38

1.700.001— Confidential client information rule. 39

1.800.001—Form of organization and name rule. 41

Part 2 – Members in Business. 42

2.100.001 – Integrity and Objectivity Rule. 45

2.130.030 Obligation of a Member to His or Her Employer’s External Accountant. 47

2.170.010 – Pressure to Breach the Rules. 47

2.300.001 — General standards rule. 47

2.310.001—Compliance with standards rule. 48

2.320.001—Accounting principles rule. 48

2.400.001 Acts Discreditable Rule. 49

2.400.070 Confidential Information from employment or volunteer activities. 49

Part 3 – Other Members. 51

3.400.001 - Acts discreditable rule. 51

3.400.070 Confidential Information from employment or volunteer activities. 51

Joint Ethics Enforcement Program.. 53

Overview.. 53

Complaint Receipt. 53

Complaint Evaluation. 53

Investigation Procedures. 54

Automatic Discipline. 54

Review Questions: 56

Index. 59

CPE Exam.. 61

Answers to Review Questions: 63