Contents

Ethics Background. 7

Morals. 7

What is Ethics?. 7

The Relationship of Morals and Ethics. 8

Professional Ethics. 9

Legal versus Ethical 9

Why Should We Study Professional Ethics?. 9

Accounting Ethics. 10

Ethical Core Foundations for CPAs. 10

Ethical Dilemmas. 11

Review Question. 13

North Carolina Administrative Code – Subchapter 08N.. 14

SECTION .0100 – Scope and Applicability. 14

21 NCAC 08N .0101 Scope of these Rules (effective 02/01/2016). 14

21 NCAC 08N .0102 Applicability and Organization of Rules (effective 02/01/2016). 14

21 NCAC 08N .0103 Responsibility for Compliance by Others (effective 02/01/2016). 14

Section .0200 – Rules Applicable to All CPAs. 14

21 NCAC 08N .0201 Integrity (effective 02/01/2016). 14

21 NCAC 08N .0202 Deceptive Conduct Prohibited (effective 02/01/2016). 15

21 NCAC 08N .0203 Discreditable Conduct Prohibited (effective 02/01/2016). 15

21 NCAC 08N .0204 Discipline by Federal and State Authorities (effective 02/01/2016). 16

21 NCAC 08N .0205 Confidentiality (amended 02/01/2016). 16

21 NCAC 08N .0206 Cooperation with Board Inquiry (effective 02/01/2016). 17

21 NCAC 08N .0207 Violation of Tax Laws (effective 02/01/2016). 17

21 NCAC 08N .0208 Reporting Convictions, Judgments, and Disciplinary Actions ( effective 02/01/2016). 17

21 NCAC 08N .0209 Accounting Principles (effective 02/01/2016). 17

21 NCAC 08N .0211 Responsibilities in Tax Practice (effective 02/01/2016). 18

21 NCAC 08N .0212 Competence (effective 02/01/2016). 18

21 NCAC 08N .0213 Other Rules (effective 02/01/2016). 19

21 NCAC 08N .0214 Outsourcing to Third-Party Service Providers (effective 02/01/2016). 19

21 NCAC 08N .0215 International Financial Accounting Standards (effective 02/01/2016). 19

Section .0300 – Rules Applicable to all CPAs Who Use the CPA Title in Offering or Rendering Products or Services to Clients. 20

21 NCAC 08N .0301 Professional Judgment (effective 02/01/2016). 20

21 NCAC 08N .0302 Forms of Practice (effective 02/01/2016). 20

21 NCAC 08N .0303 Objectivity and Conflicts of Interest (effective 02/01/2016). 21

21 NCAC 08N .0304 Consulting Services Standards (effective 02/01/2016). 22

21 NCAC 08N .0305 Retention of Client Records (effective 02/01/2016). 22

21 NCAC 08N .0306 Advertising or Others Forms of Solicitation (effective 02/01/2016). 24

21 NCAC 08N .0307 CPA Firm Names (effective 02/01/2016). 25

21 NCAC 08N .0308 Valuation Services Standards (effective 02/01/2016). 25

21 NCAC 08N .0309 Personal Financial Planning Services (effective 02/01/2016). 26

Section .0400 – Rules Applicable to CPAs Performing Attest Services. 26

21 NCAC 08N .0401 Public Reliance (effective 02/01/2016). 26

21 NCAC 08N .0402 Independence (effective 02/01/2016). 26

21 NCAC 08N .0403 Auditing Standards (effective 02/01/2016). 28

21 NCAC 08N .0404 Accounting and Review Services Standards (effective 02/01/2016). 28

21 NCAC 08N .0405 Governmental Accounting Standards (effective 02/01/2016). 29

21 NCAC 08N .0406 Attestation Standards (effective 02/01/2016). 29

21 NCAC 08N .0408 Peer Review Standards (effective 02/01/2016). 29

21 NCAC 08N .0409 Government Auditing Standards (effective 02/01/2016). 30

Case Studies. 31

Contingent Fees. 31

Competence and Advertising. 31

Return of client provided records. 32

Review Questions. 33

The AICPA Code of Professional Conduct. 34

Use of the AICPA Code of Professional Conduct by the North Carolina Association of CPAs. 34

About the Code. 34

Part 1 – Members in Public Practice. 35

Rule 1.100 Integrity and Objectivity. 36

1.130 Preparing and Reporting Information. 37

1.200 - Independence. 38

Rule 1.300—General Standards Rule. 42

1.310 Compliance with Standards Rule. 43

1.320 Accounting Principles Rule. 43

1.400.001 Acts Discreditable Rule. 44

1.510.001 — Contingent Fees Rule. 45

1.520.001—Commissions and referral fees Rule. 46

1.600.001 —Advertising and other forms of solicitation. 47

1.700.001— Confidential client information rule. 48

1.800.001—Form of organization and name rule. 49

Answers to Review Questions. 55