Professional ethics

Test Your Knowledge of Professional Ethics

Many AICPA members have expressed confusion about provisions covered under Interpretation 101-3, Performance of Nonattest Services, of the AICPA Code of Professional Conduct. For example, what nonattest services can a CPA perform for an attest client? What are the requirements involving management responsibilities to oversee the project? This quiz is

Comparing the Ethics Codes: AICPA and IFAC

Sharp increases in the number of multinational audits being performed by U.S. accounting firms means that more CPAs are performing services under the International Federation of Accountants (IFAC) audit and attest standards. Although auditors must comply with the specific standards adopted in each jurisdiction, familiarity with IFAC’s International Ethics Standards

Test Your Knowledge of Professional Ethics

Periodically the JofA publishes questions on ethics topics that have been raised by AICPA members via the Institute’s Ethics Hotline. This set of questions and staff answers deals with the application of the Code of Professional Conduct (AICPA Professional Standards). 1. A CPA firm has a partner who is “semiretired.”


The AICPA Professional Ethics Executive Committee (PEEC) released exposure drafts of revisions to guidance regarding the AICPA Code of Professional Conduct (the Code). The EDs make clarifying revisions to an ethics ruling under Rule 301, Confidential Client Information, and to two interpretations and one ethics ruling under Rule 101, Independence.

Understanding Internal Control and Internal Control Services

This white paper written by Thomas A. Ratcliffe and Charles E. Landes and prepared by the AICPA Audit and Attestation Standards and Professional Publications teams seeks to clear up confusion among practitioners relating to the concept of internal control over financial reporting. It describes the concepts of internal control (specifically

AICPA to Release Proposed Revisions to Ethics Rules

The AICPA Professional Ethics Executive Committee (PEEC) voted on Thursday to release exposure drafts of revisions to guidance regarding the AICPA Code of Professional Conduct (the Code). The EDs, which will be released this month for a 60-day comment period, make clarifying revisions to an ethics ruling under Rule 301,

International Board Releases Revised Ethics Code

The International Ethics Standards Board for Accountants (IESBA) on Friday issued a revised version of its Code of Ethics for Professional Accountants that strengthens auditor independence requirements. The IESBA is an independent standard-setting board of the International Federation of Accountants (IFAC). The revised code, which is effective Jan. 1, 2011:

Strengthening Tax Services' Foundation

The AICPA’s Statements on Standards for Tax Services (SSTSs) have been updated, clarified and streamlined in proposed revisions now available for study and comment by AICPA members. They can be found on the Tax Division pages of the AICPA Web site at The SSTSs are enforceable rules of conduct

Help for Solving CPAs' Ethical Dilemmas

Company controller Plony, CPA, prepared his employer’s 2007 financial statements knowing that they misstated revenues. The company’s CEO, who could fire Plony at will, “strongly urged” Plony to record sales at full invoice prices despite customers’ rights to return merchandise long after a normal return period. Plony’s brother-in-law, a company

Madoff Auditor Charged with Securities Fraud

Federal officials filed criminal and civil charges against Bernard Madoff’s auditor on Wednesday, and the AICPA expelled him from the Institute after concluding its own ethics investigation. In a civil complaint filed in federal court in Manhattan, the SEC alleges that from 1991 through 2008, David G. Friehling and his

Ethics as Recruiting Tool

The ethical—or unethical—behavior of an organization is a critical factor for new college graduates seeking jobs, according to the National Association of Colleges and Employers. The NACE’s 2008 Graduating Student Survey found that current graduates are much more likely to avoid employers they perceive as engaging in unethical behavior than

Refocusing on Reliability

EXECUTIVE SUMMARY Current technical literature precludes CPAs from performing review engagements when independence is impaired and requires modifying reports to disclose lack of independence in compilation engagements. The AICPA Reliability Task Force asserts that the conceptual foundation regarding the services CPAs provide to clients should be modified to refocus on


FASB issued a revised exposure draft of a Proposed Statement of Financial Accounting Standards, Earnings per Share—an amendment of FASB Statement No. 128. The proposed statement is intended to improve financial reporting by clarifying and simplifying the method of calculating earnings per share. As part of international convergence efforts, the

Professional Issues

A new AICPA specialty credential in forensic accounting will be launched in early fall. The credential, Certified in Financial Forensics (CFF), combines specialized forensic accounting expertise with the core knowledge and skills that make CPAs among the most trusted business advisers, according to Robert Harris, chair of the National Accreditation


The SEC signed protocols to share information on the application of IFRS with financial regulators in four European countries. The arrangements with regulators in Belgium, Bulgaria, Norway and Portugal are in line with the plan previously agreed to between the SEC and the Committee of European Securities Regulators (CESR). These

Fair Treatment of Fair Value?

The Journal of Accountancy ’s May 2008 discussions of fair value “accounting” (“The Role of Fair Value Accounting in the Subprime Mortgage Meltdown,” page 34), more correctly described as fair market valuation, are interesting. Each opinion on this subject presents a compelling argument. Fair Value vs. The Audit Debates on


FASB and the China Accounting Standards Committee (CASC) issued a Memorandum of Understanding articulating their commitment to strengthen cooperation and communication between the standard–setting organizations. The MOU calls for FASB and the CASC to, among other things, work to build the technical foundation for sharing views on convergence of accounting

A Global Standard for Professional Ethics

EXECUTIVE SUMMARY Standard setting organizations in more than 100 countries have adopted the International Federation of Accountants’ (IFAC) Code of Ethics for Professional Accountants, while others are in the process of converging with the code. The code applies to professionals in public practice, business, academia and government. The IFAC code’s

Formal Ethics and Compliance Programs

In its study of private U.S. companies, the Ethics Resource Center identified the following basic elements of comprehensive ethics programs—though only three (*) are mandated by the Sarbanes-Oxley Act: Written standards for ethical conduct* Training on company standards of ethical workplace conduct Provision of a mechanism for seeking ethics-related information

The Intersection of FIN 48 and Tax Opinions

FASB’s Interpretation no. 48, Accounting for Uncertainty in Income Taxes, has changed how enterprises recognize and measure tax benefits associated with tax positions and disclose in their financial statements uncertainties related to income tax positions. Most enterprises have found they must take a variety of steps to comply, including determining


6 key areas of change for accountants and auditors

New accounting standards on revenue recognition, leases, and credit losses present implementation challenges. This independently-written report identifies the hurdles that accounting professionals face and provides tips for overcoming the challenges.


How tax reform will impact individual taxpayers

Amy Wang, a CPA who is a senior technical manager for tax advocacy at the AICPA, answers to some of the most common questions on how the new tax reform law will impact individual taxpayers.