Independence - Yellow Milestone

These are scenarios for the yellow independence milestone - related to the AICPA Code of Professional Conduct.

You can ask your teammates for help in answering these questions and you can also use the resource guide or links to find the answers. The key to success is discussing the scenarios with your teammates and sharing your knowledge with each other.

Abbreviations used include:
• OBA - Oregon Board of Accountancy
• OAR - Oregon Administrative Rules
• ORS - Oregon Revised Statutes
• CPC - AICPA Code of Professional Conduct

You will have 25 minutes to complete as many of these questions as possible. Work as a team to read the questions, discuss the ethical dilemmas and use the resource guide to find answers to questions you don't know how to answer.

Once you and your teammates agree on the answer type your answer into the box provided and submit it.

Question Title

* 1. You suspect one of your teammates has committed fraud, but you are afraid that reporting this might require you to violate company confidentiality policy.

What factors should you consider now that you have identified an ethical conflict? Earn 1 PEP for each factor you can identify. 

CPC 2.000.020 Ethical Conflicts

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* 2. The maintenance of competence requires a commitment to learning and professional improvement that must continue throughout a member's professional life.  It is a member's individual responsibility.

All teammates earn 1 PEP for accepting this responsibility to continue professional education.  (Due Care 0.300.060)

Enter the names of each teammate present at the table at this time in order to receive your PEPs.

Question Title

* 3. Everyone comes to you for financial analysis because they know you have all the details and your numbers are always reliable.

As a CPA working in industry, can you demonstrate independence? Receive 3 PEPs.  

CPC 0.300.050.05 Principles of Professional Conduct

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* 4. Your mom wants you to attend a special family event.  You tell her you are unable to be there because you are working on a special debt offering for the company and it is due by next week.

Have you violated confidentiality rules under AICPA CPC?  Your team can award or deduct 5 PEPs for your response.

CPC 2.400.070  Confidential Information Obtained From Employment or Volunteer Activities  Follow instructions on Resource Page to open CPC via Table of Contents

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* 5. You're in charge of creating internal control procedures to protect the company you work for. You ask the auditors to assist you.  Can they without impairing their independence?

Earn 5 PEPs for listing 2 conditions under which auditors can assist internal audit.

CPC Non-Attest Services and 1295.040.01

Question Title

* 6. What reliable safeguards should the firm put in place to prevent threats to independence?  CPC or

Choose the team member who is most likely to have reliable data on this question and ask them to share their information with the team.

If your teammate agrees to share earn 6 PEPs. Otherwise lose 3 PEPs.

Question Title

* 7. Publications of Interpretations on Ethics Rulings in The Journal of Accountancy constitute notice to members. What is the effective date of a pronouncement published in The Journal of Accountancy?

Earn 2 PEPs for your response. (CPC 0.600.010 CPC Introduction)

Question Title

* 8. You have a job opening for a CPA in your company. A member of the audit team applies for the job and continues to participate in the audit.

Has independence been impaired?  What would your character do about this?  Your team can award or take away 2 PEPs for your response.

CPC 1.279.010 Considering employment with an attest client

Question Title

* 9. A friend of yours runs a local non-profit and has been seeking sponsorship by your company for several years. He asks you to serve on his Board of Directors in an attempt to build a relationship with your company.

How does this affect your independence, both as a CPA and as a corporate employee?  Your team may award you 1, 2 or 3 PEPs for your response.

CPC 1.275.010

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* 10. CPA firms can no longer perform non-attest services without impairing independence. What are non-attest services? Under what conditions can a CPA firm perform these services and still maintain independence?

Your team can award you 1, 2 or 3 PEPs for your response.  

CPC Non-Attest Services 1.295.010 and 1.295.040