Table of Contents

Table of Contents  iii

Section I. Current Ethical Issues in the Accounting Profession  3

Understanding Ethics 3

A Definition of Ethics. 3

How do you act when no one is looking?. 3

Special Topics: Managing Ethics 4

Analytical Model for Ethical Decisions. 4

Fiduciary Standard of Care. 5

Managing Conflicts of Interest When Providing a Range of Services. 5

Special Topics: Regulatory Ethics 8

Objectives-Oriented Accounting. 8

AICPA: Recent Ethics Inquiries. 12

Campaign Contributions. 12

Disclosure of Commissions. 12

Independent Contractors. 13

Pro Bono/Below Cost Fees. 14

Transfer of Client Files to Another Partner in the Firm.. 14

Review Questions 15

Section II. AICPA Code of Professional Conduct  16

Preface: Applicability and Principles of Professional Conduct 16

Applicability. 16

The AICPA Principles. 16

Preamble. 16

Responsibilities Principle. 17

The Public Interest Principle. 17

Integrity Principle. 17

Objectivity and Independence Principle. 17

Due Care Principle. 17

Scope and Nature of Services Principle. 17

Using the Principles in Practice. 18

Part One of the AICPA Code: Members in Public Practice. 21

Rules Are Not Enough. 21

The Conceptual Framework Approach. 23

Ethical Conflicts. 24

Rules of the Code of Professional Conduct 25

Independence, Integrity, and Objectivity:  The Core Values of the Accounting Profession (link to West Virginia Rule) 25

1.100 Integrity and Objectivity Rule. 25

Summary of Interpretations. 25

1.200 Independence Rule. 30

What Is Independence?. 30

When Independence is Required. 30

When Independence is not Required. 30

When Independence is Impaired. 31

Conceptual Framework for Analyzing Threats to Independence. 31

Independence Rule as it Applies to Covered Members. 33

Interpretations of the Independence Rule. 34

Breach of an Independence Interpretation. 44

1.300 General Standards. 45

General Standards Rule. 45

Compliance with Standards Rule. 47

Accounting Principles Rule. 48

1.400 Acts Discreditable Rule. 49

Summary of Interpretations. 49

Other Acts That Would Be Deemed Discreditable. 52

1.500 Fees and Other Types of Remuneration. 53

Contingent Fees Rule. 53

Commissions and Referral Fees Rule. 55

1.600 Advertising and Other Forms of Solicitation. 56

Summary of Interpretations. 56

1.700 Confidential Client Information Rule. 57

1.800 Form of Organization and Name. 59

Summary of Interpretations. 59

Case Studies  62

1. Stop Thief! The Case of the Almost Stolen Clients. 62

2. Oops! The Case of the Harmless Mistakes. 63

3. Do You Have What It Takes? The Case of the Inadequate Accountant 65

4. The Last Shot at the Buzzer...Too Late!  The Case of the Losing Lady. 67

5. Give It Back!   The Case of Empty Promises. 68

Review Questions 71

Appendix I. AICPA Glossary  73

Appendix II. Answers and Explanations to Review Questions  82

Section I.  Current Ethical Issues in the Accounting Profession. 82

Section II.  AICPA Code of Professional Conduct 84

Appendix III. West Virginia Rules of Professional Conduct  90

§1-1-19.  Rules of Professional Conduct. 90

Independence, Integrity, and Objectivity. (link to AICPA rules) 90

General Standards; Accounting Principles. 90

Responsibilities to Clients. 91

Other Responsibilities and Practices. 91

§1-1-15.  Contingency Fee Contracts; Commissions; Referral Fees. 91

§1-1-17.  Accounting Corporations and Other Forms of Business. 92

Accounting Corporations. 92

Index  94

CPE Exam    96