Ethics for Alabama CPAs – 2 Hours

Alabama does not simply adopt the AICPA Code of Professional Conduct. It maintains its own Rules of Professional Conduct at Chapter 30-X-6 of the Alabama Administrative Code — similar to the AICPA Code in places, but not the same document and not the same rules. This two-hour course covers both, and is designed to meet the two-hour ethics CPE requirement Alabama licensees must complete every two years under Chapter 30-X-5-.02.

The Alabama rules are covered as they are written. Applicability comes first, including the point most often missed: a certificate holder or registered public accountant who is not engaged in the practice of public accounting is bound by only three of the rules, while everyone in practice is bound by all of them. From there the course works through independence, integrity and objectivity, and the specific circumstances Alabama treats as impairing independence — financial interests, trusteeships, joint closely held investments, and loans, with the narrow exceptions for ordinary lending; the general standards of professional competence, due professional care, planning and supervision, sufficient relevant data and the rule on forecasts, together with the auditing standards, accounting principles and other technical standards rules.

Responsibilities to clients covers confidential client information and the four circumstances in which the rule does not restrict disclosure, and contingent fees. It also covers the rules added in December 2022 on the sale or transfer of a practice and the discontinuance of a practice — the written notice that must go to every affected client by first class mail, the ninety-day window in which a client may object before consent is presumed, the prohibition on transferring any client file until consent is obtained or that window closes, the five-year retention obligation where a client cannot be contacted, and the requirement to render records unreadable when they are finally disposed of.

Other responsibilities and practices covers conduct discreditable to the profession; the effect of suspension or disbarment before the Treasury Department, another federal agency or another state board, which automatically raises the question of unprofessional conduct in Alabama; advertising and solicitation; commissions and referral fees and the disclosures they require; incompatible occupations; permitted forms of practice and firm names; the specific requirements imposed on professional corporations, including share ownership, board composition, the chief executive officer, and the consequence for the corporation if that officer's certificate is revoked; and the registration and reporting obligations that attach to each practice unit in the state.

The course also sets out the top violations reported by the Alabama State Board in its own newsletter: practising while on inactive or retired status; practising without a firm permit, which applies even to a sole practitioner; preparing financial statements for the Alabama State Licensing Board for General Contractors without enrolling in peer review; arriving in Alabama and practising or holding out as a CPA without obtaining a reciprocal Alabama certificate within twenty-four months; and being unable to document reported CPE hours when audited.

Alongside the Alabama rules, the course covers the AICPA Code of Professional Conduct across all three of its parts — members in public practice, members in business, and other members — including integrity and objectivity, preparing and reporting information, responding to noncompliance with laws and regulations, independence, the general standards, compliance with standards and accounting principles rules, acts discreditable, contingent fees, commissions and referral fees, advertising, confidential client information, and form of organization and name. The independence material is current, covering the determining fees and fee dependency interpretations effective January 2025, the revised executive and employee recruiting rules effective January 2026, and the revised interpretation on simultaneous employment or association with an attest client effective September 2026.

The reasoning behind the rules gets equal weight. The course separates morals from ethics and shows where the two diverge, using Prohibition and the Nike contract manufacturing controversy of the 1990s as cases where prevailing moral views pulled ethical standards above what the law required; sets out the five core foundations of independence, integrity, objectivity, public interest and due care; and works through the conceptual framework of threats and safeguards. Case studies include a controller whose president loads a trailer and parks it in the lot on 31 December to make budget, a friend whose cash restaurant reports a loss and who says the figures are the ones he wants reported, and a fee quoted as the greater of a fixed amount or a percentage of a client's tax refund.

Learning objectives

Upon completion of this course, participants will be able to:

1. Define ethics from an overall and professional perspective.
2. Distinguish the rules of professional conduct contained in the Alabama Administrative Code, Chapter 30-X-6.
3. Describe the ethical standards contained in the AICPA Code of Professional Conduct.