Ethics for Mississippi CPAs – 4 Hours

Mississippi asks for four hours of ethics every three years, and it does not treat those four hours as interchangeable: three hours must be a Board-approved ethics and professional conduct course, and one hour must be specific to Mississippi Public Accountancy Laws and Regulations. This four-hour course is built to that split, and covers the Mississippi material in the detail the second component demands.

The core of the course is Title 30, Chapter 6 of the Mississippi Rules and Regulations — the Code of Professional Conduct — covered rule by rule from the preamble through prohibited acts. It begins with the point that governs everything after it: the Mississippi rules incorporate the AICPA Code, and where the two conflict, the more restrictive requirement prevails as determined by the Board. The rules also reach every registrant, whether or not they are engaged in the practice of public accounting.

Independence is covered with Mississippi's own additions, including two that catch practitioners out. Independence is presumed impaired where a firm performs audit services for a fee less than the direct labor cost reasonably expected at the time the engagement was accepted — a rule aimed squarely at underpricing. And Mississippi defines close relatives expansively, reaching non-dependent children, grandchildren, stepchildren, siblings, parents, grandparents, parents-in-law and their spouses, with specific presumptions about when a close relative's financial interest or position of influence impairs independence.

Integrity and objectivity follow, including the rule that a CPA shall not subordinate judgment to non-CPAs and the presumption that using the CPA title to obtain or maintain a client creates a reasonable expectation of objectivity. Solicitation and advertising are covered in full: the nine categories Mississippi treats as false or misleading, the prohibition on persisting in contact once a prospective client has made their wishes known, the thirty-six month retention period for copies of direct communications and their distribution lists, and the five items a CPA must display when offering services over the internet — firm name, principal place of business, business telephone, Mississippi CPA license number identified as Mississippi, and Mississippi firm permit number.

The commission rule is stricter than the AICPA equivalent. A Mississippi CPA may neither pay consideration to obtain a client nor accept consideration for referring one, in addition to the familiar attest-related prohibitions; and where a commission is permitted, the disclosure must be in writing, clear and conspicuous, state the amount or the basis of calculation, be made at or before the recommendation, and be signed by both the CPA and the client.

Records receive similar attention. Mississippi states plainly that in no event shall the accountant have a lien on client accounting records, and that source documents may never be withheld — though a CPA is not compelled to surrender an uncompensated work product and may collect a reasonable reproduction fee in advance. Working papers must be kept for a minimum of five years, remain the CPA's property absent agreement, and may not be sold, transferred or bequeathed without the client's consent except to surviving or successor partners.

The course also covers contingent fees, competence, auditing standards, accounting principles, other professional standards, confidential client information, discreditable conduct, discipline by federal and state authorities, form of practice, and the seventeen prohibited acts that give the Board grounds for discipline. Beyond Chapter 6 it works through firm permits at Chapter 3 — ownership and the forty-nine per cent ceiling on non-licensee interests, resident manager requirements, firm names and the categories Mississippi treats as misleading, the disclaimer a non-qualified firm must carry, sole proprietors, the thirty-day notice obligations, and annual registration — together with continuing professional education at Chapter 4, licences and practice privileges at Chapter 2, quality and peer review at Chapter 5, and the statutory provisions on ownership of working papers and privileged communication in the Mississippi Code.

Alongside the Mississippi 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, form of organization and name, and pressure to breach the rules.

The reasoning behind the rules is covered first. 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; offers the Publicity Standard and the Person Looking Over Your Shoulder Standard as practical tests; sets out the conceptual framework of threats and safeguards; and examines the motivations that precede most ethical lapses. Arthur Andersen at Enron and the audit of Bernard Madoff Investment Securities anchor the discussion of public expectations. Mississippi case studies apply the rules directly: an audit client asking for a smaller bad debt adjustment to clear a loan covenant, a fee quoted as the greater of a fixed amount or a percentage of a tax refund, and a newly registered sole practitioner with no audit experience proposing to trade as Audit Experts Group.

Learning objectives

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

1. Recognize ethics from an overall and professional perspective.
2. Recognize the ethical standards contained in the Mississippi State Board of Public Accountancy rules.
3. Recognize the ethical standards contained in the AICPA Code of Professional Conduct.