Table of Contents

Chapter 1 - Professional Ethics for Vermont CPAs - Section 1. 9

Ethics Background. 9

Morals. 9

What is Ethics?. 9

The Relationship of Morals and Ethics. 10

Illustrative Examples of Ethics. 11

Professional Ethics. 13

Legal versus Ethical 13

Why Should We Study Professional Ethics?. 13

Accounting Ethics. 14

Ethical Core Foundations for CPAs. 14

Chapter 1 - Section 1 Review Questions. 16

Chapter 1 - Professional Ethics for Vermont CPAs - Section 2. 17

Ethical Reasoning. 17

Case Studies – Threats and Safeguards. 18

Ethical Dilemmas. 20

Public Expectations of the CPA’s Responsibility. 20

Enron and Arthur Andersen. 21

Bernard Madoff Investment Securities LLC – Failures in Expressing an Opinion on Financial Statements 22

Phar-Mor. 24

Motivations of Ethical Lapses. 25

Chapter 1 - Section 2 Review Questions. 26

Chapter 1 - Professional Ethics for Vermont CPAs - Section 3. 27

Administrative Rules for the Vermont Board of Public Accountancy. 27

PART 9 CONTINUING PROFESSIONAL EDUCATION.. 27

PART 10 PROFESSIONAL CONDUCT.. 29

Vermont Statutes, 26 V.S.A. Section 76. 33

Case Studies. 34

Independence. 34

A Little Extra Income – Contingent fees. 34

Audit Experts – Advertising and firm name. 35

Peer Review.. 35

Return of client provided records. 36

Chapter 1 - Section 3 Review Questions. 37

Chapter 1 - Professional Ethics for Vermont CPAs - Section 4. 38

The AICPA Code of Professional Conduct 38

About the Code. 38

Preface. 38

Part 1 – Members in Public Practice. 39

Rule 1.100 Integrity and Objectivity. 41

Case Study – Married Tax Clients Divorcing. 42

1.130 Preparing and Reporting Information. 43

Case Study – Year End Adjustments and Loan Covenants. 44

1.200 - Independence. 44

Chapter 1 - Section 4 Review Questions. 49

Chapter 1 - Professional Ethics for Vermont CPAs - Section 5. 50

Rule 1.300—General Standards Rule. 50

Case Study – Audit Engagement with No Prior Experience. 51

1.310 Compliance with Standards Rule. 51

Case Study – Peer Review Discoveries. 51

1.320 Accounting Principles Rule. 52

1.400.001 Acts Discreditable Rule. 52

1.510.001 — Contingent Fees Rule. 53

1.520.001—Commissions and referral fees Rule. 55

1.600.001 —Advertising and other forms of solicitation. 56

1.700.001— Confidential client information rule. 56

1.800.001—Form of organization and name rule. 58

Chapter 1 - Section 5 Review Questions. 59

Chapter 1 - Professional Ethics for Vermont CPAs - Section 6. 60

Part 2 – Members in Business. 60

2.100.001 – Integrity and Objectivity Rule. 63

2.130.030 Obligation of a Member to His or Her Employer’s External Accountant 64

Case Study – Fair Finance. 65

2.300.001 — General standards rule. 65

2.310.001—Compliance with standards rule. 66

2.320.001—Accounting principles rule. 66

Case Study - The Company with Excess Reserves. 67

Case Study - The Company with Undisclosed/Unrecorded Contingencies. 67

2.400.001 Acts Discreditable Rule. 68

2.400.070 Confidential Information from employment or volunteer activities. 69

Part 3 – Other Members. 69

3.400.001 - Acts discreditable rule. 69

3.400.070 Confidential Information from employment or volunteer activities. 70

Chapter 1 - Section 6 Review Questions. 71

Answers to Review Questions. 72

Chapter 1 - Section 1 Review Questions Feedback. 72

Chapter 1 - Section 2 Review Questions Feedback. 73

Chapter 1 - Section 3 Review Questions Feedback. 74

Chapter 1 - Section 4 Review Questions Feedback. 76

Chapter 1 - Section 5 Review Questions Feedback. 79

Chapter 1 - Section 6 Review Questions Feedback. 81

Glossary. 82

Index. 84

Final Examination. 86

CPASelfstudy.com Course Evaluation. 90