ACCT 187 - Accounting Ethics Chp. 13 (4)

Dodd-Frank Act of 2010

- Provides clawback provisions: any money made can be taken away - Whistleblowing

Prohibited Nonattest Services for Public Clients - SEC

1. Bookkeeping 2. Financial info system design and implementation 3. Appraisal/Valuation services or fairness opinions 4. Actuarial services 5. Internal audit outsourcing services 6. Management functions or HR 7. Broker or dealer services, Investment advisor 8. Legal services 9. Another other service prohibited by BOD

What should be included in the certification of financial statements?

1. Reviewed the report. 2. FS are not misleading 3. FS are fairly presented 4. Signing officers are responsible for maintaining internal controls and its effectiveness 5. The signing officers have disclosed to the auditors the significant deficiencies in the design or operation of IC and any fraud

Section 11 of Securities Act of 1933 - Initial Purchaser must prove...

1. Specific security was offered through the registration statement 2. Damages were incurred 3. Material misstatement exists 4. Plaintiff need not prove reliance on the statements unless purchase took place after one year of offering

Qualifications for Reduction under the Federal Sentencing Guidelines

1. Standards in place to prevent and detect criminal conduct 2. Organized and funded ethics program 3. Exercise due care 4. Effective training program 5. Monitoring and auditing system in place that ensures compliance 6. Follow up on criminal conduct

What needs to be included for the required filing of Securities Exchange Act of 1934?

10-Q, 10-K, Other info to keep registration current, form and content are governed by regulations

Which the following is a "reportable event," as that term is defined in the Sarbanes-Oxley Act?

A CPA firm partner is sued by a former client for committing audit malpractice

Registration with the PCAOB is required of

All CPA firms that wish to audit publicly traded companies

Private Securities Litigation Reform Act

Auditors catch illegal action they must tell BOD or audit committee and if they fail to do anything 1. Tell BOD if not already 2. They have one day to notify the SEC 3. If still fails, auditor reports to SEC

In accordance with Sarbanes-Oxley Act, employee Codes of Conduct should

Be disclosed on a company website or in SEC filings

Foreign Corrupt Act

Bribes and includes internal control provision (maintain internal control system, maintain accurate accounting records, and protect integrity) *Cannot be reimbursed by a company for fines recovered

Federal Sentencing Guidelines

Formulas for levying fines and probation on organizations

The PCAOB

Is entirely independent of the AICPA

Statutory Law

Legislation passed at state or federal level that establishes certain courses of conduct that must be adhered to by parties.

Under the Sarbanes-Oxley Act, the use of a concurring audit partner on an audit engagement for a company regulated by this Act is

Mandatory, under all circumstances

As standing goes from privity to foreseeable, it is open to less or more people?

More.

Primary Beneficiary

Must be known to the CPA

Under the Sarbanes-Oxley Act, a CFO may

Not delegate the responsibility for certifying company financial statements

Foreseeable

Opens to the rest of the public

Privity

Party to the contract [client]

Foreseen

People are realistically may rely on the financial statements

4 Types of Standing

Privity, Primary Beneficiary, Foreseen, Foreseeable

Securities Act of 1934

Regulates post-IPO annual trading of securities sold on national stock exchanges

Securities Act of 1933

Regulates the initial offering of securities through the mails or interstate commerce

After a CPA has served as the lead partner on an audit client for five years, that audit partner may

Resume providing audit services to that client after a gap in service of five years

7 Statutory Laws

Securities Act of 1933 Securities Act of 1934 Private Securities Litigation Reform Act SOX of 2002 Dodd-Frank Act of 2010 Foreign Corrupt Act Federal Sentencing Guidelines

What must one have to bring a lawsuit?

Standing

Under the Sarbanes-Oxley Act, tax professionals who are employees or partners of auditing firms may not provide

Tax return preparation services unless the provision of these services is first preapproved by the client's Audit Committee

If a publicly traded corporation misstated its accounting filings to the SEC, the "clawback" provision in the Sarbanes-Oxley Act gives the corporation the right to recover certain gains and profits earned by

The CEO and CFO of the corporation

Which of the following provisions of the Sarbanes-Oxley Act applies to nonprofit organizations?

The document destruction rules