Ethics for Illinois CPAs – 4 Hours

This four-hour course is designed to meet the four-hour ethics CPE requirement Idaho CPAs must complete every two years, and it covers the Idaho material in the detail a licensee actually needs: the Rules of the Idaho Board of Accountancy at IDAPA 24, and selected statutes from the Idaho Accountancy Act at Title 54, Chapter 2 of the Idaho Code.

On the rules of professional conduct, it works through commissions and contingent fees and the written disclosure that must precede them; confidential client information and the seven circumstances in which disclosure is nonetheless permitted; the obligation to return client records on request, the distinction between working papers that form part of a client's records and those that remain the licensee's property, and the rule that records must be returned whether or not the licensee has been paid; firm names, the majority-ownership condition for using the CPA designation, and the two-year window a surviving partner has to continue under a partnership name; and the thirty-day deadline for responding to any Board communication requesting a response.

Continuing education is covered in full: the eighty-hour requirement across two calendar years with its four hours of ethics, the minimum of thirty and maximum of fifty hours that may be recorded in any single calendar year, the separate obligation on new and reciprocal licensees to complete an Idaho state-specific ethics course, the January reporting deadline, CPE reciprocity for licensees residing in another state, the exemptions available to inactive and retired licensees together with the volunteer services they may still provide, and the penalty hours assessed for non-compliance. Firm registration and peer review follow: which firms and licensees must participate, the exemptions, the three-year cycle, the enrolment deadlines that apply to new and merged firms, the documents that must reach the Board and when, and the corrective actions available where a firm's work does not meet professional standards.

From the Accountancy Act itself, the course covers firm registration and ownership; the statutory rules on commissions, referral fees and contingent fees; the grounds on which the Board may revoke, suspend, restrict or refuse to renew a licence, together with cost recovery and administrative penalties; restrictions on the use of the CPA and LPA titles and titles likely to be confused with them; who may issue a report on financial statements and through what form of practice; and the safe-harbour language that permits a non-licensee to describe financial statements they have prepared.

Alongside the Idaho 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 and the network firm provisions, 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 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. It offers two practical tests — the Publicity Standard and the Person Looking Over Your Shoulder Standard — sets out the conceptual framework of threats and safeguards for situations no rule addresses, and examines the motivations that precede most ethical lapses: greed, self-interest, undue influence and familiarity.

Three extended studies of audit failure anchor the discussion of what the public expects of a CPA: Arthur Andersen at Enron; the audit of Bernard Madoff Investment Securities by a sole practitioner who held millions in accounts at the firm he was auditing and issued opinions for seventeen years without performing an audit; and Phar-Mor, where two sets of books and inflated inventory went undetected because the auditors observed only four stores and told the company months in advance which four.

Five Idaho case studies apply the rules directly: a CPA who receives a Board complaint from a client she has just resigned; a tax practitioner wondering whether ten compilations require peer review enrolment; a fee quoted as the greater of a fixed amount or a percentage of the client's refund; a firm with one CPA and two non-licensee partners proposing to call itself CPAs; and an unpaid auditor holding client-provided records.

Learning objectives

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

1. Define ethics from an overall and professional perspective.
2. Recognize the ethical standards contained in the Idaho Board of Accountancy Rules and the Idaho Accountancy Act.
3. Recognize the ethical standards contained in the AICPA Code of Professional Conduct.