Ethics for Arizona CPAs – 4 Hours

Arizona does not accept a generic ethics course. Under Board Rule R4-1-453, the four hours of ethics an Arizona licensee must complete has to include at least one hour on the AICPA Code of Professional Conduct and at least one hour on the Board's own statutes and administrative rules. This course is built to that structure.

The Arizona material works through the Revised Statutes at Title 32, Chapter 6 and the Administrative Code at Title 4, Chapter 1. It covers the composition of the State Board of Accountancy and the powers granted to it, beginning with its primary duty — protecting the public from unlawful, incompetent, unqualified or unprofessional CPAs. It sets out the grounds on which the Board may revoke or suspend a certificate or impose discipline, from felony conviction and accounting or tax offences through dishonesty, fraud and gross or continuing negligence, discipline imposed by another jurisdiction or by the SEC or PCAOB, offering or accepting commissions or contingency fees alongside assurance work, and failing to respond to the Board in writing in a timely manner.

It then covers the rules a licensee meets in day-to-day practice: limited reciprocity for CPAs licensed elsewhere and the conditions attached to it; use of the CPA designation, including by those whose certificate has been revoked; the events that must be reported to the Board in writing within thirty days; firm names and the restrictions on terms such as “& Company” and “& Associates”; peer review and the three-year window preceding a firm's registration date; biennial registration and the eighty-hour continuing education requirement with its subject-area minimums, live-instruction component and three-year record retention; the confidential nature of information a CPA acquires and the circumstances in which it may still be disclosed; ownership and custody of working papers and what must be furnished to a client on request; the technical standards governing audit documentation; and fraudulent audit practices, which Arizona treats as a class 5 felony — class 4 where securities are involved.

On the AICPA side, the course works through integrity and objectivity, independence and the seven threats framework, subordination of judgment, conflicts of interest, knowing misrepresentation, client advocacy, advertising and solicitation, due care and competence, unpaid fees, confidential client information, records requests, contingent fees, commissions and referral fees, and acts discreditable to the profession. Under Rule R4-1-455 the Board adopts the AICPA Code and applies it to every Arizona licensee, whether or not they are an AICPA member.

The first part of the course sets out the ethical frameworks behind the rules — consequentialism, deontology and virtue ethics — and the last part deals with putting them into practice: the rationalizations that precede misconduct, the warning signs of an organization on the verge of ethical collapse, and what rebuilding moral character takes.

Case studies drawn from real events run throughout, including WorldCom, HealthSouth, the fraud at Buca Inc., the 2007–2010 mortgage crisis, Toronto-Dominion Bank, the Scott London insider-trading case at KPMG, and the embezzlement at Collin Street Bakery — alongside an Arizona practitioner who performed audits without registering her firm, skipped peer review, and then ignored the Board's letter asking her to explain herself.

Two appendices reproduce the source law: the Arizona Revised Statutes at Title 32, Chapter 6, and the Arizona Administrative Code at Title 4, Chapter 1.

Learning objectives

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

1. Apply the ethics of professional accounting as CPAs through the analysis of case studies involving both actual situations and hypothetical facts.
2. Apply ethical judgment in interpreting the rules and determining the public interest, recognising that the public interest should be placed ahead of self-interest even at the cost of a job or a client.
3. Analyze and apply the AICPA Code of Professional Conduct and the Arizona law that pertains to CPAs licensed to practise in the state of Arizona, including the Arizona Revised Statutes, the Administrative Rules and Code of Professional Conduct, and the policies adopted by the Board currently in effect.
4. Determine the course of action that would uphold the intent of the rules in the performance of professional accounting services, rather than mere technical compliance with those rules.
5. Determine how the rules apply across different practice settings, including CPAs who provide assurance, attest or compilation services and CPAs who provide tax services.