ACCTG 5510 1st Edition Lecture 4 Outline of Last Lecture I Causes of lawsuits against CPA firms II Legal Terms III Four Major Sources of Auditor s Legal Liability IV Liability to Clients V CPA firms four defenses VI Liability to third parties under common law VII Securities Act of 1933 VIII Securities Exchange Act of 1934 IX Foreign Corrupt Practices Act of 1977 X Sarbanes Oxley Act XI Criminal Liability XII XII Statements on Standards for Accounting and Review Services SSARS a Review Services SSARS review b Form a Report Outline of Current Lecture I II CPA Responsibility to serve the public What is the product of the CPA III AICPA Code of Professional Conduct IV PCAOB and SEC Independence These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Current Lecture I II III IV CPA Responsibility to serve the public includes certain expectations CPA s should be a Competent b Fair to all parties not bias c Independent of the client d A trusted third party What is the product of the CPA a Credibility is the main product produced by a CPA b The end user of financial statements and data has a positive view of the attest function they rely on the work of CPA s to make decisions c Confidence in CPA s is further enhanced by i Peer review ii SEC and PCAOB iii Legal liability AICPA Code of Professional Conduct a The AICPA developed the code to guide the ethical behavior of CPA s Much of the code is not enforceable Only the rules section is enforceable Most publically traded companies are subject to regulations by the SEC and PCAOB which is much more strict then the AICPA code the AICPA deals mostly with private companies b The code of professional conduct is made up of i Principles a framework that is not enforceable ii Rules governs the performance of professional services and is the minimum enforceable standard iii Interpretations provides a guide for the application of the rules and the scope of them iv Ethical Rulings provides a summary of the application of rules and interpretations to particular factual circumstances which are published in the Journal of Accountancy PCAOB and SEC Independence a In order to preserve independence a CPA firm is prohibited from providing the following services to an attestation client i Bookkeeping ii Financial information systems development and implementation iii Appraisal and valuation iv Actuarial services v Internal audit outsourcing vi Management and human resources vii Broker dealer or investment banker services viii Legal expertise