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Ethics for CPAs

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Ethics for CPAs Why are we here? To meet Tennessee s CPE requirements more specifically, an hour of Tennessee Specific Ethics for CPAs! – PowerPoint PPT presentation

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Title: Ethics for CPAs


1
Ethics for CPAs
  • Why are we here?
  • To meet Tennessees CPE requirements more
    specifically, an hour of Tennessee Specific
    Ethics for CPAs!

2
What happens when we Google Ethics?
3
This Happens
4
Ethics and Productivity
5
A Few Definitions
  • Ethics
  • Denotes the theory of right action and the
    greater good (Ethical Standards Honesty,
    Compassion, and Loyalty).1
  • The continuous effort of studying our own moral
    beliefs and our moral conduct, and striving to
    ensure that we, and the institutions we help to
    shape, live up to standards that are reasonable
    and solidly based.2

6
More Definitions
  • Morals
  • Personal ethics signifies a moral code applicable
    to individuals, while social ethics means moral
    theory applied to groups
  • Personal ethics signifies a moral code applicable
    to individuals. It indicates a person's
    comprehension of morality and the capacity to put
    it into practice, the ability to distinguish
    between right and wrong.
  • Ethics is not limited to specific acts and
    defined moral codes, but encompasses the whole of
    moral ideals and behaviors, a person's philosophy
    of life1

7
Ethics is not only a global concern. It
traversed history
  • Socrates - posited that people will naturally do
    what is good, if they know what is right. Evil
    or bad actions are the result of ignorance. If a
    criminal were truly aware of the mental and
    spiritual consequences of his actions, he would
    neither commit nor even consider committing them
    (GUILT?) Any person who knows what is truly
    right will automatically do it, according to
    Socrates. While he equated knowledge with virtue,
    he similarly equated virtue with happiness. The
    truly wise man will know what is right, do what
    is good and therefore be happy.

8
Still Another Definition
  • Hedonism
  • supported immediate gratification. "Eat, drink
    and be merry, for tomorrow we die." Even fleeting
    desires should be indulged, for fear the
    opportunity should be forever lost. There was
    little to no concern with the future, the present
    dominating in the pursuit for immediate pleasure.
    Cyrenaic hedonism encouraged the pursuit of
    enjoyment and indulgence without hesitation,
    believing pleasure to be the only good. (NO
    GUILT?) 1

9
Definitions Provided by
  • 1 Wikipedia
  • 2 Ethics IIE V! N! (Fall 1987)

10
CPE Requirements
40 hrs
4 hrs
11
CPE Requirements Cont.
12
CPE Requirements Cont.
http//www.tncpa.org/cpe/SelfStudyExam.aspx
13
Tennessee Accountancy Act of 1998TCA 62-1-101
et seq
  • RULES OF DEPARTMENT OF COMMERCE AND INSURANCE
  • DIVISION OF REGULATORY BOARDS
  • TENNESSEE STATE BOARD OF ACCOUNTANCY
  •  
  •  
  • Chapters Title
  • 0020-1...........................................B
    oard of Accountancy, Licensing and Registration
    Requirements
  • 0020-2............................................
    .................................Educational and
    Experience Requirements
  • 0020-3............................................
    ..................................................
    ...Rules of Professional Conduct
  • 0020-4............................................
    .........................................Disciplin
    ary Action and Civil Penalties
  • 0020-5............................................
    ..................................................
    .................Continuing Education
  • 0020-6............................................
    ..................................................
    .................Peer Review Program
  •  

14
62-1-101.02 The Board of Accountancy
  • 11 members are appointed by the governor
  • 9 must be CPAs 3 from each grand divisions of the
    state
  • 1 must be a licensed attorney
  • 1 shall be a public member
  • TSCPA provides a list of qualified CPAs from
    which the members are chosen
  • Meet at least 4 times a year

15
Housekeeping
  • Chapter 0020-1
  • 0020-1-.01 Definitions
  • 0020-1-.02 Board Meetings
  • 0020-1-.03 Board Officers
  • 0020-1-.04 Fees
  • 0020-1-.05 Applications
  • 0020-1-.06 Examinations
  • 0020-1-.07 Cheating
  • 0020-1-.08 Renewal of
    Licenses
  • 0020-1-.09 Denial of
    Certificate
  • 0020-1-.10 Reinstatement of
    Revoked or Suspended
    Licenses
  • 0020-1-.11 Application Renewal of CPA and
    PA Firm Permits
  • 0020-1-.12 Notification of Firm
    Changes
  • 0020-1-.13 Interstate Practice
  • 0020-1-.14 International
    Reciprocity
  • 0020-1-.15 Repealed

16
0020-1-.08 Renewal of Licenses
See web site
  • Licenses can be renewed on-line at the Board of
    Accountancys web site. http//tennessee.gov/comm
    erce/boards/tnsba/documents/2007renwalinstructions
    1_003.pdf - Instructionshttp//www.tennesseeanyt
    ime.org/cirens/ - renewal
  • Need to provide satisfactory evidence that the
    continuing professional education requirements
    have been met T.C.A. 62-1-107(d) and Chapter
    0020-5 of the Boards rules 
  • Additional evidence may be requested from
    licensees for continuing professional education
    requirements including continuing professional
    education audits (which require CPE course
    completion documentation)  
  • Listings of CPE courses are not considered
    evidence for this rule.

17
Renewal Instructions
18
0020-1-.09 Denial of Certificate
  • An applicant denied a certificate will be
    notified in writing by the Board of such denial
    and the reasons.
  • The applicant may request an appearance before
    the Board to reconsider the denial at its next
    scheduled meeting.
  • The request must be sent to the Executive
    Director within thirty (30) days of the date of
    the notice of denial.

19
0020-1-.10 Reinstatement of Revoked or Suspended
Licenses
  • If your license is revoked or suspended
    applicants must follow the Rules in section .10
    to request reinstatement.

20
CHAPTER 0020-3RULES OF PROFESSIONAL CONDUCT
  • 0020-3-.01 Definitions
  • 0020-3-.02 Applicability
  • 0020-3-.03 Independence
  • 0020-3-.04 Integrity and Objectivity
  • 0020-3-.05 Contingent Fees, Commissions and
    Other Consideration
  • 0020-3-.06 Disclosures
  • 0020-3-.07 Competence
  • 0020-3-.08 Compliance with Standards
  • 0020-3-.09 Accounting Principles
  • 0020-3-.10 Confidential Client Information
  • 0020-3-.11 Records
  • 0020-3-.12 Discreditable Acts
  • 0020-3-.13 Acting Through Others
  • 0020-3-.14 Advertising and Other Forms of
    Solicitation
  • 0020-3-.15 Firms
  • 0020-3-.16 Notification to the Board
  • 0020-3-.17 Retention of Records

21
RULES OF PROFESSIONAL CONDUCT
  • A licensee shall comply with the AICPA Code of
    Professional Conduct when these rules are silent
    on any matter.

22
0020-3-.03 Independence
  • Follow
  • AICPA
  • SEC or
  • GAO Yellow Book

23
0020-3-.04 Integrity and Objectivity
  • In the performance of any professional service,
    a licensee shall maintain objectivity and
    integrity, shall be free of any undisclosed
    conflicts of interest, and shall not knowingly
    misrepresent facts or subordinate his or her
    judgment to others.

24
0020-3.05 Contingent Fees, Commissions and Other
Consideration
  • Do not pay any consideration or commission to
    obtain a client or for referral of a client to
    others if you perform for that client in any of
    the following
  • Audit or review of a financial statement
  • Compilation of a financial statement (for 3rd
    party use with no independence disclosure)
  • An examination of prospective financial
    information

25
0020-3.05 Contingent Fees, Commissions and Other
Consideration
  • Do not pay any consideration or commission to
    obtain a client or for referral of a client to
    others if you perform for that client in any of
    the following
  • If any consideration or commission is ever
    received for services or for referral of services
    disclosure must me made in compliance with T.C.A
    62-1-122 
  • Never receive or agree to receive a contingent
    fee from a client for preparation of an original
    tax return. T.C.A 62-1-123

26
0020-3.05 Contingent Fees, Commissions and Other
Consideration
  • If payments of the aforementioned kind are
    received a form is provided by the Board that may
    be used to comply with disclosure requirements in
    section .06

27
As a professional
  • one should get paid for services rendered
  • however, if the payment type might give the
    appearance of a conflict or give rise to an
    independence issue
  • check with the board about disclosures.
  • To quote and old cliché, it is better to be safe
    than sorry especially if you could lose your
    license.

28
0020-3-.07 COMPETENCE
  • Comply with the standards of governing bodies
    AICPA, GAO
  • Professional Competence
  • Due Professional Care
  • Planning and Supervision
  • Sufficient Relevant Data

29
0020-3-.09 ACCOUNTING PRINCIPLES
  • (1) A licensee shall not
  •  
  • (a) Express an opinion or state affirmatively
    that the financial statements or other financial
    data of any entity are presented in conformity
    with generally accepted accounting principles or
  •  
  • (b) State that he or she is not aware of any
    material modifications that should be made to
    such statements or data in order for them to be
    in conformity with generally accepted accounting
    principles if such statements or data contain any
    departure from an accounting principle
    promulgated by bodies designated by the AICPA to
    establish such principles, which departure has a
    material effect on the statements or data taken
    as a whole.
  • Referenced TCA 62-1-111. Revocation, suspension
    or refusal to renew license Other penalties
    Hearings Procedure Costs.

30
0020-3-.10 CONFIDENTIAL CLIENT INFORMATION.
  • Do not disclose any confidential client
    information without the specific consent of the
    client.
  • This does not  
  • Relieve a licensee of his or her professional
    obligations
  • Affect obligation to comply with subpoena or
    summons
  • Prohibit review of professional practice
  • Issuing a complaint with or responding to any
    investigative inquiry or disciplinary body
  • Utilizing any such relevant information in the
    defense of a claim
  • Restrict the exchange of information with a
    recognized investigative or disciplinary body.
  • Recognized investigators, disciplinary bodies,
    and professional practice reviewers shall not use
    to their own advantage or disclose confidential
    client information that comes to their attention
    in carrying out their official responsibilities.

31
0020-3-.11 RECORDS
  • Furnish in a reasonable time
  • Report or other documentation belonging to the
    client
  • Accounting or other documents belonging to the
    client
  • Working papers (if part of the clients books and
    records)

32
0020-3-.12 DISCREDITABLE ACTS
  • Reflects adversely on the profession.
  •  
  • If a CPA or candidate solicits, discloses, and/or
    uses information concerning the CPA exam, they
    will have committed an act discreditable to the
    profession. NO CHEATING!!!

33
0020-3-.13 ACTING THROUGH OTHERS
  • Can not permit others to carry out on your behalf
    any act that if you carried out would constitute
    a violation

34
0020-3-.14 Advertising and Solicitation
  • Do not use false, misleading or deceptive
    advertising
  • Can not coerce or harass people to use you!

35
0020-3-.15 FIRMS
  • Must insure that firm name is not misleading
  • Must be registered and approved by the board
  • May be disproved by the board
  • A CPA may practice under his/her own name or that
    of inactive or deceased partners who were CPAs. A
    partner surviving the death or withdrawal may
    continue to practice under the name for up to 2
    years after becoming a sole practitioner.
  • A firm has 60 days to fix the name after a
    violation notification has been given

36
0020-3-.16 Notification to the Board
  • A CPA must notify the board IN WRITING within 30
    DAYS any change of
  • Name
  • Address
  • Change of Employment
  • respond in writing to any communication from the
    board within 30 days
  • file a written answer to any complaint received
    by the board within 14 days.

37
0020-3-.17 RETENTION OF RECORDS.
  • A CPA shall maintain copies, or other obtainable
    facsimile records, or computer records, in
    whatever manner kept, of all work papers and work
    product used to render or support rendering
    public accounting services to a client for a
    period of five (5) years. The five (5) year
    period shall commence at the end of the fiscal
    period in which the engagement was conducted.
    Premature destruction of these records shall
    subject the licensee to disciplinary action.

38
Disciplinary Action and Civil Penalties
  • Board may assess penalties for violation of Law
  • Impose fine from 0.00 to 1000.00 
  • Grounds are set out in TCA 62-1-111 include
  • Incompetence
  • Dishonesty
  • Concealment
  • Attendees have been provided a copy of the Rules
    and TCA specific to Tennessee.

39
Concluding Thoughts
  • 73 percent of US workforce said they had
    witnessed unethical conduct
  •  
  • The unethical conduct contributed to an
    uninviting less productive workplace. Many
    workers were distracted by the conduct and told
    around 5 to 8 other people about the situation.
  • It pays for a business to promote ethical
    behavior.
  • Corporate ethics affects an employees
    productivity.
  • By Pomeroy, Ann, HRMagazine, Sunday, July 1 2007

40
Concluding Thoughts
  • FAs Managements Guide to Risk Management and
    Internal Control has excellent questions for
    monitoring employees understanding of
    managements philosophy.
  • Has managements philosophy been developed,
    understood, and embraced by its personnel?
  • Has a method to monitor or test the attributes of
    managements philosophy been integrated into the
    entitys culture? i.e. survey 
  •  

41
Pilipino Government
  • It states, there is a sense of hope and
    opportunity for us and the future generations.
    There is a growing sense of returning to the
    basics, to those time-honored values of quality
    and integrity and harnessing a community-based
    sense of ethics. There is a growing convergence
    of thought towards social responsibilities and
    commitment, of reaching beyond purely corporate
    and corporeal objectives. This awakening
    consciousness is nestled among more and more
    individuals, groups.

42
  • Is this true? in the United States? When law
    after law and rule after rule has to be passed to
    try and keep people and businesses ethical?
    Is it all talk and no action?

43
Resources on the Web!!
  • AICPA Code of Professional Conducthttp//www.aicp
    a.org/about/code/index.htm
  • Tennessee Board of Accountancyhttp//tennessee.go
    v/commerce/boards/tnsba/
  • Instructionshttp//tennessee.gov/commerce/boards/
    tnsba/documents/2007renwalinstructions1_003.pdf
  • Renewalhttp//www.tennesseeanytime.org/cirens/
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