Contents

Ethics Background. 9

Morals. 9

What is Ethics?. 9

The Relationship of Morals and Ethics. 10

Professional Ethics. 12

Legal versus Ethical 12

Why Should We Study Professional Ethics?. 12

Accounting Ethics. 13

Ethical Core Foundations for CPAs. 13

Ethical Reasoning. 14

Case Studies – Threats and Safeguards. 16

Ethical Dilemmas. 18

Review Question. 19

Michigan Administrative Code. 20

R 338.5102 Standards of professional practice adopted by reference. 20

R 338.5104   Retention of documents. 20

R 338.5210   Continuing education requirements; reporting; qualifying hours. 20

R 338.5211    Renewal of license with insufficient qualifying hours permitted under certain circumstances; waiver of requirement for additional hours. 20

R 338.5215     Measurement of continuing education hours; "continuous instruction" defined. 21

R 338.5216    Group programs. 21

R 338.5217 Instruction. 21

R 338.5218 Self-study programs. 22

R 338.5240 Carryover of continuing education hours. 22

R 338.5255 Qualifying continuing education subjects. 22

R 338.5401 Responsibility for conduct of supervised persons. 22

R 338.5405 Independence rule; adoption by reference. 23

R 338.5435 Licensee competence required to undertake professional engagement. 23

R 338.5465 Acts constituting discreditable conduct. 23

The AICPA Code of Professional Conduct. 25

About the Code. 25

Preface. 25

Part 1 – Members in Public Practice. 27

Rule 1.100 Integrity and Objectivity. 28

Case Study – Married Tax Clients Divorcing. 29

1.130 Preparing and Reporting Information. 29

Case Study – Year End Adjustments and Loan Covenants. 30

1.200 - Independence. 31

Review Questions. 36

Rule 1.300—General Standards Rule. 37

1.310 Compliance with Standards Rule. 38

Case Study – Peer Review Discoveries. 38

1.320 Accounting Principles Rule. 38

1.400.001 Acts Discreditable Rule. 39

1.510.001 — Contingent Fees Rule. 40

1.520.001—Commissions and referral fees Rule. 42

1.600.001 —Advertising and other forms of solicitation. 43

1.700.001— Confidential client information rule. 44

1.800.001—Form of organization and name rule. 45

Review Questions. 46

Part 2 – Members in Business. 47

2.100.001 – Integrity and Objectivity Rule. 47

2.130.030 Obligation of a Member to His or Her Employer’s External Accountant. 48

2.170.010 – Pressure to Breach the Rules. 49

2.300.001 — General standards rule. 49

2.310.001—Compliance with standards rule. 49

2.320.001—Accounting principles rule. 49

Case Study - The Company with Excess Reserves. 50

2.400.001 Acts Discreditable Rule. 51

2.400.070 Confidential Information from employment or volunteer activities. 52

Part 3 – Other Members. 53

3.400.001 - Acts discreditable rule. 53

3.400.070 Confidential Information from employment or volunteer activities. 53

Glossary. 55

Index. 56

CPE Exam.. 58

Answers to Review Questions. 60