Test your knowledge

Test Your Knowledge of Professional Ethics

P eriodically, the Journal publishes ethics questions raised by American Institute of CPAs members. This set deals with ET section 500, “Other Responsibilities and Practices,” of AICPA Professional Standards .*

QUESTIONS

1. May a member’s firm include its name on a tax newsletter if it was not prepared by the firm?

   Yes

   No

2. Two members, A and B, are sole proprietors and would like to work together on a client engagement. Although A and B have not legally formed a partnership, they would like to use a joint letterhead (“A & B, CPAs”) in connection with the engagement. Is this permissible under the Code of Professional Conduct?

   Yes

   No

3. A member is not an owner of a firm but shares in its profits and has overall responsibility for certain client accounts. The member has been promised a partnership interest in the firm in the near future. Would it be proper to include the member’s name on the firm’s letterhead under the caption “Partners”?

   Yes

   No

4. A CPA firm’s marketing brochure, prepared by an outside agency, includes the following statement: “When it comes to taxes, no other firm has the knowledge and experience of XY&Z, CPAs.” Would this statement be in violation of Rule 502-Advertising and Solicitation?

   Yes

   No

5. A member terminates his or her relationship with a firm and establishes a practice as a sole proprietor. May the member solicit clients of the former firm?

   Yes

   No

6. In an ad in the yellow pages, a member refers to himself or herself as a “tax expert.” Is this permissible under the Code of Professional Conduct?

   Yes

   No

ANSWERS

1. Yes, provided reasonable measures are taken to ensure the information contained within the publication is not false, misleading or deceptive.
2. No. Use of the letterhead would be considered misleading because a true partnership does not exist.
3. No. Until the member is legally a partner, it would be misleading to so include the member’s name.
4. Probably. Such a representation would be considered false or misleading if there is no practical way to substantiate the statement.
5. Yes, provided the member does not solicit clients in a false, misleading, deceptive or harassing manner.
6. Possibly. The use of such a designation is permissible provided the member can demonstrate he or she has expertise in the tax area as a result of education, training, experience, etc.

*This quiz is based on the AICPA ethics staff’s responses to member inquiries. It is not a professional ethics executive committee pronouncement nor does it purport to set forth an official AICPA position. In addition, the Qs & As do not address the requirements of other regulatory bodies, such as state boards and the SEC, whose positions may differ from those of the AICPA.

Edited by Lisa A. Snyder, technical manager, in the AICPA professional ethics division.