PARAPHRASE FOR QUESTION 1 AND 2 Example

Essays on PARAPHRASE FOR QUESTION 1 AND 2 Essay Running Head: ABBREVIATED OF YOUR CHOICE (all caps) and Section # of Question 1 Harold Potter received his master’s degree in accounting from Hogwarts University recently. He violated the rule 502-2 by declaring himself an accountant although he was a bookkeeper for a decade in the accounting department. The rule states that "advertising or other forms of solicitation that are false, misleading, or deceptive are not in the public interest and are prohibited". As per the rule, he was in violation as he misled people by handing over cards which pronounced him a position he did not hold yet. When he passed his CPA exam, he registered a company by the name of â€Å"Aaaron, Wonka and Zzucker", so that is shows on either the top of the directory listings or the last. The name shows that the company is collaboration of three different companies, hence another rule namely section 505 was broken, which in turn was a method to deceive people. The section clearly declares it to be illegal practice by a CPA member. Potter’s business was not running to his expectations, hence entered Mr. Ronald for assistance, who is the Potter’s uncle. Ronald asked Potter to audit the accounts for his company named â€Å"Dumbledore Enterprises†, even though that Potter had no prior experience to this job. Therefore he exploited another law namely rule 201-1 which clearly states that all CPA members need to acquire certain professional competence prior to providing professional services. Moreover, he violated rule 302.01 when he came under contract to receive 12 percent of Dumbledore’s tax liability decrease from the previous year. This certain rule clearly states that â€Å"A member in public practice shall not prepare an original or amended tax return or claim for a tax refund for a contingent fee for any client." Furthermore, Potter also dishonored section 56 article V-Don’t Care which describes that each CPA member is responsible for judging his own qualification and stand ard of jobs which he can carry out. The only experience Potter had on his resume’ was the decade long experience of bookkeeping, which is not considered a professional task in any book or law. Therefore, it can easily be concluded that Potter was incompetent for the job he acquired at Dumbledore Enterprises. The owner of 51 % of Dumbledore Enterprises, Ronald and also one of the directors came to a decision about hiring Potter as an independent auditor. This decision is in direct violation with section 101, which clearly mentions that independence would be considered void, if the decision with painted with doubt as a result of a relative holding a key position in reference to the client involved. Moreover, Potter also breached section 102-2-Conflict of interests as Potter held the position of a bookkeeper for a decade. This section explains how the conflict of interest may occur, when a certain relationship is involved between the professional and the client or employer. Potter knew that his uncle was not playing a fair game regarding the financial statements, but still decided to cover it up in his quarterly reports thus violating 102-1, a section regulating the honesty of auditors. This rule states that the member shall be considered an offender if he: - generates misleading and deceiving financial statements - does not correct any irregularities in the financial statements, knowingly - permits a document to be processed, knowingly that it has false information in it A complaint was recorded against Mr. Ronald with the AICPA. The records that were requested for investigation were refused to be disclosed barring client’s confidentiality. This according to rule 301 is a rightful act, that of protecting the clients financial statistics but on the other hand the same rule states that only if it is not hampering with an ongoing investigation of the member’s wrongdoings. Therefore, it can easily be said that Potter cannot, under any circumstances hold that information. Potter now partners with Hermonie Granger and Rubeus Hagrid as his business progresses with more clients. Out of the three only two are members of AICPA therefore violating 505-form of organization and name as they deceive their clients in believing that all three are members. The final violation which can be accredited to them is by going in business with rich clients, with a 1000 dollar commission for referral, therefore violating rule 503. Question 2 Code of Ethics When a person joins an accounting organization, he agrees to fulfill the ethical requirements. The Code of Professional Conduct of the American Institute of CPAs (AICPA), the national professional association for CPAs clearly defines ethical rules for its members. There is a definite line of standards which has been set by the two organizations. The Institute of Management Accountants (IMA) Standards of Ethical Conduct is for the people working in the area of management accounting and financial management where as IIA (Institute of Internal Auditors) regulates the code of ethics for its own members and Certified Internal Auditors (CIAs). Ethical Responsibilities A distinctive separation between professionals who practice medicine or accounting is their uptight responsibility to the public. The AICPA describes that all those involved in this business rely on the correct running of commerce by CPAs. Many CPAs are known as public practitioners, which offer their services to general public are not present in all firms. Regardless though the rules and regulations of AICPA apply on them equally, although there are some exceptions present. Internal auditors, financial managers and management accountants are the most common employees of a firm which provide these services, but are not above the rules of professional conduct. The rules applied under the three ethics code on these professionals are pretty similar in nature. All of them require capability, discretion, honesty and impartiality from them. These professionals should only take tasks that they are capable of. All three standards require professionals to uphold confidential client information. The only exemption to this rule is when a court order is held against any individual and the records are ordered to be made available by court. Independence Mainly impartiality and honesty call for maintain a balance when conflict of interest is present. This phenomenon is called independence. Only if a professional is aloof from external pressure, will he make right and unbiased decisions. Although this is a general criteria, but special emphasis is laid on CPA professionals working for the public sector. A detailed account for the rules and regulation for such professionals are present in AICPA’s rules. For example, a CPA member accounting for a firm where his personal interests lie will never be impartial to the cause. Ethics Enforcements Majorly, an accounting professional is self-assessed rather than government-assessed. The three rule enforcing agencies have internal methods to enforce their rules and regulations. Moreover, violations of these codes can lead to public humiliation and cancellation of license for practicing. Therefore, such expulsion from service can really hamper a professional’s reputation and also indict him in light of state and federal laws. The CPA practicing license is issued by the state, normally through state board of accountancy. As the AICPA code is a part of legislation, it holds legal enforceability. As a result, a breach in the AICPA law can result in revoking of the license and legal action against the offender. Since the license authority is AICPA and the state society, both may sit in the investigative board of wrong doing for any professional. All CPAs which audit public corporations come under federal law. The SEC (Securities and Exchange Commission) which is the guardian of these laws has essential powers so they can control the corporations who sell their stock to public. One important obligation for these financial corporation is to get audited by an independent CPA. The SEC has legal rights to ensure the auditing regulations and standards, which incorporate the parameters of a CPA’s independence criteria. The ISB (Independence Standards Board) was jointly established by SEC and AICPA in 1998, which would ensure a minimum standard of independent auditors and also work for the improvement of the standard. This was an all important step towards the impartiality of the independent auditor, without which the whole system can be cheated, in turn putting investment of the general public at stake.