4-52
96.
Explain when and how to evaluate whether certain nonattest services can be provided to
attest clients.
4-54
97.
Why do CPAs have to be aware of ethical conflicts in performing professional services and
which rules of conduct are most directly affected by the evaluation? How do CPAs assess
risks due to ethical conflicts and possible impairments of the rules?
4-57
98.
Explain how CPAs should evaluate risks to integrity and objectivity when considering
providing gifts to audit clients and/or client management or accepting risks from them.
Gifts made or received, in particular, may cloud audit judgment and impair independence.
They can compromise objectivity and integrity because of the size and/or importance of
the gift and the purpose of giving it or receiving it from the client. To avoid a conflict of
interest that may impair integrity, objectivity and independence, the following guidelines
should be followed.
If the audit is completed, the first question is whether the acceptance of the gift might
make it appear to a reasonable observer that the gift is intended to influence the audit
opinion. If so, that would create an undue influence threat and compromise integrity and
objectivity. Also, it could be perceived as an advance payoff for future audit opinions. The
influence does not have to be immediate. Beyond that, an important issue to consider is:
Would acceptance violate any laws, regulations, or firm policies. If so, acceptance would
create a threat that cannot be reduced or eliminated through any safeguards. If not,
consider the following:
• What is the nature, value, and intent of the gift?
• Is it more than clearly inconsequential?
• Is it reasonable in the circumstances?
• Is it standard practice to accept or reject such gifts?
• Does the client expect a “quid pro quo?”
99.
What is the purpose of the confidentiality rules in the AICPA Code? Describe the specific
provisions and when confidentiality requirements might be waived.
4-60
100.
A young man by the name of Mr. Hicks works at an accounting firm which has a written
ethics code of conduct. The code specifically outlines the duties and obligations that every
employee must follow without question. One of rules states that every accountant should
not lie under any circumstances.
Last week Mr. Hicks sent out a finalized tax return to the Wrong client. The Wrong client
called Hicks and informed him that he was sending the tax return back to him overnight.
Meanwhile the Right client called Hicks and wanted to know where the tax return was.
Hicks told the Right client that he sent it to the wrong address and he will send out the
return the next day. The Right client was irritated and called the partner of the firm.
The partner scolded Hicks and wanted to know why he told the client he sent the return to
the wrong address. The partner said he should have told the client that the return was in
the 2nd partner review or some other excuse to cover up the mistake. Hicks explained that
the ethics code of conduct specifically states that he should not lie under any
circumstances and he was just following his ethical duty. The partner grinned and told
Hicks that the next time this happens he should consult with the partner first.
Using the ethical decision making model and ethical theories, justify the positions of the
partner, Hicks or an alternative solution.
