Table of Contents

Chapter 1 - Professional Ethics for Colorado CPAs - Section 1. 10

Ethics Background. 10

Morals. 10

What is Ethics?. 10

The Relationship of Morals and Ethics. 11

Illustrative Examples of Ethics. 12

Professional Ethics. 13

Legal versus Ethical 14

Why Should We Study Professional Ethics?. 14

Accounting Ethics. 14

Ethical Core Foundations for CPAs. 15

Chapter 1 - Section 1 Review Questions. 17

Chapter 1 - Professional Ethics for Colorado CPAs - Section 2. 18

Ethical Reasoning. 18

Case Studies – Threats and Safeguards. 19

Ethical Dilemmas. 21

Public Expectations of the CPA’s Responsibility. 21

Enron and Arthur Andersen. 22

Bernard Madoff Investment Securities LLC – Failures in Expressing an Opinion on Financial Statements 23

Motivations of Ethical Lapses. 25

Chapter 1 - Section 2 Review Questions. 27

Chapter 1 - Professional Ethics for Colorado CPAs - Section 3. 28

Rules of the Colorado State Board of Accountancy. 28

Chapter 9: Rules of Professional Conduct 28

9.1 Definitions. 28

9.2 Independence. 29

9.3 Integrity and Objectivity. 30

9.4 Commissions, Referral Fees and Contingent Fees. 31

9.5 Professional Competence and Compliance with Applicable Technical Standards. 32

9.6 OTHER PROFESSIONAL STANDARDS. 33

9.7 Acting Through Others. 33

9.8 Confidential Client and Employer Information. 34

9.9 Issuing Copies of Reports, Tax Returns or Other Documents. 35

9.10 Client Records. 35

9.11 Safeguarding Client Records and Property. 37

9.12 Solicitation. 37

9.13 Incorporation of AICPA Code of Professional Conduct 38

9.14 Incorporation of Standards. 38

Case Studies. 39

A Little Extra Income – Contingent Fees. 39

Audit Experts - Competence and Advertising. 39

Return of client provided records. 40

Chapter 1 - Section 3 Review Questions. 42

Chapter 1 - Professional Ethics for Colorado CPAs - Section 4. 44

The AICPA Code of Professional Conduct 44

About the Code. 44

Preface. 44

Part 1 – Members in Public Practice. 45

Rule 1.100 Integrity and Objectivity. 47

Case Study – Married Tax Clients Divorcing. 48

1.130 Preparing and Reporting Information. 49

Case Study – Year End Adjustments and Loan Covenants. 50

1.200 - Independence. 50

Chapter 1 - Section 4 Review Questions. 55

Chapter 1 - Professional Ethics for Colorado CPAs - Section 5. 56

Rule 1.300—General Standards Rule. 56

Case Study – Audit Engagement with No Prior Experience. 57

1.310 Compliance with Standards Rule. 57

Case Study – Peer Review Discoveries. 57

1.320 Accounting Principles Rule. 58

1.400.001 Acts Discreditable Rule. 58

1.510.001 — Contingent Fees Rule. 59

1.520.001—Commissions and referral fees Rule. 60

1.600.001 —Advertising and other forms of solicitation. 62

1.700.001— Confidential client information rule. 62

1.800.001—Form of organization and name rule. 64

Chapter 1 - Section 5 Review Questions. 65

Chapter 1 - Professional Ethics for Colorado CPAs - Section 6. 66

Part 2 – Members in Business. 66

2.100.001 – Integrity and Objectivity Rule. 69

2.130.030 Obligation of a Member to His or Her Employer’s External Accountant 70

2.170.010 – Pressure to Breach the Rules. 71

Case Study – Fair Finance. 71

2.300.001 — General standards rule. 72

2.310.001—Compliance with standards rule. 72

2.320.001—Accounting principles rule. 72

Case Study - The Company with Excess Reserves. 73

Case Study - The Company with Undisclosed/Unrecorded Contingencies. 74

2.400.001 Acts Discreditable Rule. 74

2.400.070 Confidential Information from employment or volunteer activities. 75

Part 3 – Other Members. 76

3.400.001 - Acts discreditable rule. 76

3.400.070 Confidential Information from employment or volunteer activities. 76

Chapter 1 - Section 6 Review Questions. 78

Answers/Explanations for Review Questions. 79

Chapter 1 - Section 1 Review Questions Feedback. 79

Chapter 1 - Section 2 Review Questions Feedback. 80

Chapter 1 - Section 3 Review Questions Feedback. 81

Chapter 1 - Section 4 Review Questions Feedback. 85

Chapter 1 - Section 5 Review Questions Feedback. 86

Chapter 1 - Section 6 Review Questions Feedback. 88

Glossary. 89

Index. 90

Final Examination. 93

CPASelfstudy.com Course Evaluation. 97