Question

CPAs are required to abide by professional standards as outlined in the AlCPA Code of Professional Conduct and related guidance. It is important for CPAs to understand the structure of the professional guidance so that they can find the information needed to determine an appropriate course of action when dilemmas arise.

CONCEPT REVIEW:

The Code of Professional Conduct is structured in two major sections called Principles and Rules. Principles outline the profession's responsibilities to the public, clients, and fellow practitioners. Rules are enforceable applications of the Principles. Additional guidance that further explains the scope and application of the Rules is included in Interpretations and Ethics Rulings.

It is important to understand the structure of the auditor's Code of Professional Conduct. Place the following descriptions into the appropriate category.

Answer 1

Solution:

Principles:

Overall framework for professional services

Each of these is called an Article (i.e., Article I, Article II, etc.)

Rules:

Govern performance of professional

Several of these correspond to GAAS

Interpretations

Provide guidelines as to scope and implementation

Ethics Rulings

Summarize applications in particular instances

Explanation:

The principal includes overall professional services framework; and Articles

The rules are to govern professional performance and how it correspond to GAAS

Interpretation gives guidelines as to scope and implementation

Ethics Rulings would summarize application in specific instances