Professional Ethics Auditor Responsibilities

Professional competence refers to the public accountant having the appropriate educational training for the related PA designation.

True
False
False
Integrity is the duty to be honest and conscientious in performing professional services.

True
False
True
If a PA hears through the "grapevine" that a company is disgruntled with their current auditors, it is acceptable to contact the company and quote a fee for performing the audit.

True
False
False
Names of past owners of a public accounting firm may not be included in the firm name if they are deceased.

True
False
False
As a PA you are only responsible to the rules of conduct of your professional body even if you have a client that deals on the stock exchange.

True
False
False
What is a Contingency fee and under what characteristics would a fee be considered contingent?
A contingency fee is when a fee is payable to a PA for a professional service only when there is a specified determination or result of the service. The two characteristics that need to be met are the terms of the service must be contracted prior to any service being performed and the amount paid for the performance must be directly affected by the results obtained.
Is it ok for a PA to advertise? If so, what are the quidelines about advertising?
It is now ok for public accountants to advertise if the advertising is designed to attract business and is in good taste. The guidelines are that advertising may not create false or unjustified expectations of favourable results, it may not imply that the PA can influence and court, tribunal etc, it may no contain a fee estimate when the PA knows it is likely to be substantially increased and it may not contain any representation that is likely to cause a reasonable person to misunderstand or be deceived or that contravenes professional good taste.
What are the fundamental principles in codes of conduct for professional accountants?
Members should at all times maintain the good reputation of the profession and its ability to serve the public interest and perform with integrity, objectivity, independence, professional competence, due care, confidentiality, not be associated with any misleading information or misrepresentation and to show professional courtesy to other members at all times.
Where do the Rules of Professional Conduct get their power or authority from?
The public accountant's professional bodies of CGA, CMA and CA have bylaws which provide authority for the Rules of Professional Conduct. Each member of the professional body must comply with these rules in public practice and other people acting on the PA's behalf.
How are the fundamental principles further expanded upon for a PA's code of conduct?
A member should avoid conflicts of interest with a client's affair, develop their practice based on excellence not self promotion and sustain professional competence at all times.
act-utilitarianism:
(in moral philosophy) emphasis on the individual act is it is affected by the specific circumstances of a situation.

categorical imperative:
(in moral philosophy) Kant's specification of an unconditional obligation.

commission:
a percentage fee charged for professional services in connection with executing a transaction or performing some other business activity.

contingent fee:
a fee established for the performance of any service in an arrangement in which no fee will be charged unless a specific finding or result is attained, or the fee otherwise depends on the result of the service.

generalization argument:
(in moral philosophy) a judicious combination of the imperative and utilitarian principles.

referral fees:
(a) fees a CPA receives for recommending another CPA's services and (b) fees a CPA pays to obtain a client. Such fees may or may not be based on a percentage of the amount of any transaction.

rule-utilitarianism:
(in moral philosophy) emphasis on the centrality of rules for ethical behaviour while still maintaining the criterion of the greatest universal good.

safe harbour:
plaintiffs in a lawsuit must show that the auditor did not act in good faith when reporting on a forecast, effectively placing the burden of proof on the plaintiff.