Wiley CPAexcel Exam Review 2014 Focus Notes: Auditing and Attestation

Focus on: Professional Responsibilities—Module 1

CODE OF PROFESSIONAL RESPONSIBILITIES

AICPA

General Standards and Accounting Principles

• A CPA must perform with competence and must exercise due care
• Competence implies combination of education and experience
• Due care includes proper supervision and reviewing work of assistants
• Examples of actions that would violate the standard of due care include
  • Performing professional services without complying with the appropriate standards
  • Expressing an unqualified opinion on financial statements known to be materially misstated
  • Failing to report the discovery of fraud to the client’s audit committee

Independence

• A member in public practice should be independent in the performance of professional services as required by AICPA standards.
• The independence rule and its related interpretations are heavily examined; rulings are examined to a lesser extent.
• Interpretation 101-1 is extremely important; it has three major subsections.

A. Restricts activities and investments by those involved on the attest engagement—covered members.

B. Restricts investments in the client by all in CPA firm.

C. Restricts positions held in the client by all in CPA firm.

Interpretation 101 A: Independence—Those Involved with the Audit

Covered members: The concept of covered members is important since certain independence requirements apply to them. Included as “covered members” are:

• A member of the attest engagement team.
• A person who may influence the attest ...