Table of Contents

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

Ethical Reasoning. 17

Case Studies Threats and Safeguards. 18

Ethical Dilemmas. 20

Public Expectations of the CPAs Responsibility. 20

Enron and Arthur Andersen. 21

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

Motivations of Ethical Lapses. 24

Chapter 1 - Section 2 Review Questions. 25

Chapter 1 - Professional Ethics for Pennsylvania CPAs - Section 3. 26

Pennsylvania Code, Title 49, Chapter 11. 26

Relations with Clients and Public. 26

Continuing Professional Education. 32

Peer Review.. 36

Case Studies. 39

A Little Extra Income Contingent Fees. 39

Audit Experts - Competence and Advertising. 40

Return of client provided records. 40

Chapter 1 - Section 3 Review Questions. 42

Chapter 1 - Professional Ethics for Pennsylvania CPAs - Section 4. 43

The AICPA Code of Professional Conduct 43

About the Code. 43

Preface. 43

Part 1 Members in Public Practice. 44

Rule 1.100 Integrity and Objectivity. 46

Case Study Married Tax Clients Divorcing. 47

1.130 Preparing and Reporting Information. 48

Case Study Year End Adjustments and Loan Covenants. 49

1.200 - Independence. 49

Chapter 1 - Section 4 Review Questions. 54

Chapter 1 - Professional Ethics for Pennsylvania CPAs - Section 5. 55

Rule 1.300General Standards Rule. 55

Case Study Audit Engagement with No Prior Experience. 56

1.310 Compliance with Standards Rule. 56

Case Study Peer Review Discoveries. 56

1.320 Accounting Principles Rule. 57

1.400.001 Acts Discreditable Rule. 57

1.510.001 Contingent Fees Rule. 58

1.520.001Commissions and referral fees Rule. 60

1.600.001 Advertising and other forms of solicitation. 61

1.700.001 Confidential client information rule. 61

1.800.001Form of organization and name rule. 63

Chapter 1 - Section 5 Review Questions. 64

Chapter 1 - Professional Ethics for Pennsylvania CPAs - Section 6. 65

Part 2 Members in Business. 65

2.100.001 Integrity and Objectivity Rule. 68

2.130.030 Obligation of a Member to His or Her Employers External Accountant 69

Case Study Fair Finance. 69

2.300.001 General standards rule. 70

2.310.001Compliance with standards rule. 71

2.320.001Accounting principles rule. 71

Case Study - The Company with Excess Reserves. 71

Case Study - The Company with Undisclosed/Unrecorded Contingencies. 72

2.400.001 Acts Discreditable Rule. 73

2.400.070 Confidential Information from employment or volunteer activities. 74

Part 3 Other Members. 74

3.400.001 - Acts discreditable rule. 74

3.400.070 Confidential Information from employment or volunteer activities. 75

Chapter 1 - Section 6 Review Questions. 76

Answers to Review Questions. 77

Chapter 1 - Section 1 Review Questions. 77

Chapter 1 - Section 2 Review Questions Feedback. 78

Chapter 1 - Section 3 Review Questions Feedback. 79

Chapter 1 - Section 4 Review Questions Feedback. 82

Chapter 1 - Section 5 Review Questions Feedback. 83

Chapter 1 - Section 6 Review Questions Feedback. 85

Glossary. 86

Index. 88

Final Examination. 90

CPASelfstudy.com Course Evaluation. 94