Question

Read "It's Time for Principles-Based Accounting Ethics" which can be accessed through the DeVry Library Services (Links to an external site.). In answer to the following questions:

Read the AICPA Code of Professional Conduct (Links to an external site.) (pdf version) and summarize any TWO of the below contents of Part I of the Code of Conduct. Introduction

1.100 Integrity and Objectivity

1.200 Independence

1.300 General Standards

1.310 Compliance with Standards

1.320 Accounting Principles

1.400 Acts Discreditable

Answer 1

The Code of Professional Conduct of the American Institute of Certified Public Accountants consists of two sections--(1) the Principles and (2) the Rules. The Principles provide the framework for the Rules, which govern the performance of professional services by members.

The Code of Professional Conduct was adopted by the membership to provide guidance and rules to all members--those in public practice, in industry, in government, and in education--in the performance of their professional responsibilities.

Compliance with the Code of Professional Conduct, as with all standards in an open society, depends primarily on members' understanding and voluntary actions, secondarily on reinforcement by peers and public opinion, and ultimately on disciplinary proceedings, when necessary, against members who fail to comply with the Rules.

THE BELOW ARE THE CONTENTS OF PART 1 OF THE CODE OF CONDUCT :

1.100 ) Integrity and Objectivity :

In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.

1.200) Independence :

A member in public practice shall be independent in the performance of professional services as required by standards promulgated by bodies designated by Council.

Independence shall be considered to be impaired if, for example, a member had any of the following transactions, interests, or relationships which are as follows :

A) During the period of a professionals engagement or at the time of expressing an opinion, a member or a member's firm

1. Had or was committed to acquire any direct or material indirect financial interest in the enterprise.

2. Was a trustee of any trust or executor or administrator of any estate if such trust or estate had or was committed to acquire any direct or material indirect financial interest in the enterprise.

3. Had any joint, closely held business investment with the enterprise or with any officer, director, or principal stockholders thereof that was material in relation to the member's net worth or to the net worth of the member's firm.

4. Had any loan to or from the enterprise or any officer, director, or principal stockholder of the enterprise. This proscription does not apply to the following loans from a financial institution when made under normal lending procedures, terms, and requirements:

a. Loans obtained by a member or a member's firm that are not material in relation to the net worth of such borrower.

b. Home mortgages.

c. Other secured loans, except loans guaranteed by a member's firm which are otherwise unsecured.

B) During the period covered by the financial statements, during the period of the professional engagement, or at the time of expressing an opinion, a member or a member's firm :

1.Was connected with the enterprise as a promoter, underwriter or voting trustee, as a director or officer, or in any capacity equivalent to that of a member of management or of an employee.

2. Was a trustee for any pension or profit-sharing trust of the enterprise.

1.300) General Standards :

A member shall comply with the following standards and with any interpretations thereof by bodies designated by Council.

A) Professional Competence :

Undertake only those professional services that the member or the member's firm can reasonably expect to be completed with professional competence.

B) Due Professional Care :

Exercise due professional care in the performance of professional services.

C) Planning and Supervision :

Adequately plan and supervise the performance of professional services.

D) Sufficient Relevant Data :

Obtain sufficient relevant data to afford a reasonable basis for conclusions or recommendations in relation to any professional services performed.

1.310) Compliance with Standards :

A member who performs auditing, review, compilation, management advisory, tax, or other professional services shall comply with standards promulgated by bodies designated by Council.

1.320) Accounting Principles :

A member shall not (1) 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 (2) 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 Council to establish such principles that has a material effect on the statements or data taken as a whole. If, however, the statements or data contain such a departure and the member can demonstrate that due to unusual circumstances the financial statements or data would otherwise have been misleading, the member can comply with the rule by describing the departure, its approximate effects, if practicable, and the reasons why compliance with the principle would result in a misleading statement.

1.400) Acts Discreditable

A member shall not commit an act discreditable to the profession

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