CPA Ethics & Professional Responsibilities Flashcards

Under Circular 230, which practitioner action is considered a 'best practice'?

Answer: Communicating clearly with clients about the terms of the engagement

Circular 230 best practices include clearly communicating engagement terms, procedures, and limitations to clients.

Which body has the authority to suspend or disbar a CPA from practicing before the IRS?

Answer: Office of Professional Responsibility (OPR)

The IRS Office of Professional Responsibility (OPR) enforces Circular 230 and has authority to sanction, suspend, or disbar tax practitioners.

A CPA who provides investment advisory services must register with:

Answer: The SEC or appropriate state securities regulator as an investment adviser

CPAs providing investment advisory services for compensation must register under the Investment Advisers Act with the SEC or state securities regulators.

Under the AICPA Code of Professional Conduct, a CPA must maintain client confidentiality EXCEPT when:

Answer: Responding to a peer review

CPAs are required to cooperate with peer review processes, which is a recognized exception to the general client confidentiality rule.

Which statement best describes a CPA's responsibility when a client asks them to act as an expert witness?

Answer: The CPA must provide objective testimony based on professional expertise

When serving as an expert witness, a CPA must provide objective, unbiased testimony based on professional expertise rather than advocate for the client.

The Sarbanes-Oxley Act (SOX) prohibits a public company audit firm from providing which non-audit service to an audit client?

Answer: Bookkeeping or other accounting services related to financial statements

SOX Section 201 explicitly prohibits audit firms from providing bookkeeping and accounting services for the financial statements they audit.