Codification
Codification
• Divided into separate parts
– first part applicable to all members … covers:
• structure of the AICPA Code
• principles of professional conduct
• defined terms that are used in the
• non-authoritative guidance
• new, revised, and pending interpretations
Codification
• Remaining three parts divided according to
member‘s practice
– Part 1 … public practice
– Part 2 … business & industry
– Part 3 … all others
• such as those who are retired or unemployed
Codification Substantive Changes
• Added two conceptual framework
interpretations :
– Conceptual Framework for Members in Business‖
– Conceptual Framework for Members in Public
• Self-review threat:
– expanded to cover judgments made or work
performed by an individual currently with the
firm who was previously associated with the
client
Codification
• Impossible to cover every possible
relationship or circumstance
• Two conceptual frameworks outline a
“threats and safeguards approach”
– a way of identifying, evaluating, & addressing
threats to compliance resulting from a specific
relationship or circumstance
– required to use threats and safeguards
approach only when no guidance on point
“the Committee found the proposed
revisions to be beneficial to
members. The layout is easy to read
and user-friendly. The Committee
believes the “conceptual framework
approach” with two interpretations
… is the right approach. The revised
Code contains good examples and
improved guidance for members.”
Independence
• June 2012 Exposure / Approved January 29, 2013
• PEEC amended 101-3 to:
– withdraw a requirement that impairs independence if
a CPA designs or maintains internal controls for an
attest client
• effective for engagements covering periods beginning on or after
December 15, 2013. Early implementation allowed.
– clarify that preparation of financial statements, in
whole or in part, is a non attest service
• Effective for engagements covering periods beginning on or after
December 15, 2014. Early implementation NOT allowed
Independence
• Minor amendments to definition of:
– “Professional Services”
– “Public Practice”
• Delete definition of:
– “Holding Out”
2012 Report Card on the
Ethics of American Youth
Installment 1: Honesty and Integrity
November 30, 2012
Lying, Cheating And Stealing
Among American Students Drops
• Students admitted they had cheated on an
exam in the past year
– 2010 – 59%
– 2012 – 51%
• Lied to a teacher in the past year about
something significant
– 2010 – 61%
– 2012 – 55%
• Stolen something from a store in the past year.
– 2010 – 27%
– 2012 – 20%
Lying, Cheating And Stealing
Among American Students Drops
• 99% - “it is important for me to be a person
with good character”
• 93% - satisfied with their own ethics &
character
• 81% - believe that when it comes to doing
what is right, they are better than most
people they know
Millennials Significantly More Likely to
Let the Ends Justify the Means
Percentage of Workers Who Strongly Agree/Agree to Look the
Other Way if Company did Something Questionable
More Experienced Workers Consult Company Resources
For Help With Work Related Issues,
Where Younger Workers Consult Family
When employees feel they work in an organization
where ethical conduct matters, they are more likely
to be engaged in their jobs.
Insights About the Generations
• The younger the worker
– more social interaction influences their perceptions
about ethics
• „The older the employee
– more hierarchy, structure and visible company
commitment matter
• „Culture makes a difference for all generations
– Younger workers
• culture is the sum of their interactions with other individuals,
much of which interaction is with coworkers.
– Older workers
• get their cues about culture from company’s stated values,
messages from the top, and their beliefs about the organization
as a whole.
Ethics Disciplinary Actions
2012-13
• Terminations – automatic
– Stacy Sheedy
• Rule 501 – Acts Discreditable
– Charles Spillman
• Failure to comply with required corrective action
• AICPA terminated also
Ethics Disciplinary Actions
2012-13
• Suspensions – 2
– Suspension # 1
• Rule 501-7 – Failure to file tax return or pay tax
liability
– AICPA and IRS suspension also
– Suspension # 2
• Rule 501 – Acts Discreditable
• Rule 502 – Advertising and Other Forms of
Solicitation
Ethics Disciplinary Actions
2012-13
• Rule 591.191 – Removing Client Files From
an Accounting Firm
• Rule 501 – Acts Discreditable
– Held out as a CPA with an expired license.
• Rule 501 – Acts Discreditable
– Did not observe requirements Circular 230
• Rule 202 – Compliance with Standards
• Rule 203 – Accounting Principles
Ethics Disciplinary Actions
2012-13
• Other cases
– 3 – No violation or no further action
– 1 – Deferral due to litigation
– Non member complaints
• 2 – Referred to AICPA
• 2 – Referred to Attorney General