Ethics for Iowa CPAs – 4 Hours

This four-hour course is designed to meet the four-hour ethics and professional conduct CPE requirement Iowa CPAs must complete every three years, and covers Section 193A of the Iowa Administrative Code in the detail that requirement implies — Chapter 13 on the Rules of Professional Ethics and Conduct, Chapter 14 on disciplinary authority and the grounds for discipline, Chapter 11 on peer review, and the mandatory education rules at Chapter 10.

Iowa's starting point matters and the course opens with it: the Board has adopted the AICPA Code of Professional Conduct, but where the AICPA Code and the Iowa rules conflict, the Iowa rules prevail. The rules also reach further than most states — they apply to every professional service performed by every CPA and LPA, whether or not that person is engaged in the practice of public accountancy, except where a particular rule says otherwise.

From there the course works through the rules that apply to all licensees: the thirty-day deadline for responding to a Board communication, and the separate thirty-day obligation to report discipline imposed by the SEC, PCAOB, IRS, another state board or a foreign credentialing body, matters reportable to the PCAOB under Sarbanes-Oxley, civil judgments, settlements and arbitration awards alleging gross negligence, fraud or misappropriation, and criminal charges, deferred prosecutions and pleas. It covers each firm's duty to designate someone responsible for reporting, disclosure of examination questions, and the treatment of falsely reported continuing education as an act discreditable.

The rules that turn on title and service are covered next: who may use the CPA and LPA titles and the permits a firm needs to describe itself as either; acting through others; the requirement that all audit, review and other attest services in Iowa, or for a client with an Iowa home office, be performed through a firm holding an active Iowa permit or exercising a practice privilege, and the fact that LPAs and LPA firms are not authorized to perform attest services at all; who may issue a compilation report and the peer review obligation that attaches; and how the ethics rules apply to a CPA in tax practice.

Discipline is covered in full, with the Board's twelve grounds set out and explained: fraud or deceit in procuring a licence, professional incompetence, deceptive practices, unethical or harmful conduct, lack of proper qualifications, negligence, professional misconduct, willful or repeated violations, failure to report, failure to comply with a Board order, conviction of a crime, and conduct discreditable to the accounting profession. Peer review follows — who must participate, the three-year cycle, the internal quality control system a firm must have in place before its first attest or compilation engagement and the eighteen-month window that follows, qualifying programmes, waivers, and the thirty-day submission of the final report — together with the point that preparation services under SSARS 21 do not by themselves trigger peer review.

Continuing education is covered as its own subject: the four ethics hours every three years, the additional eight hours of financial statement presentation required of anyone supervising compilation services or signing a compilation report, the one-hour minimum that must be devoted to ethics for a multi-topic course to count, the twenty subject areas an Iowa ethics course is limited to, and the alternative cycle rule that lets a licensee choose a 31 December or 30 June deadline and change that choice from one renewal to the next.

Alongside the Iowa 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 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; offers the Publicity Standard and the Person Looking Over Your Shoulder Standard as practical tests; sets out the conceptual framework of threats and safeguards with worked illustrations of each threat category; and examines the motivations that precede most ethical lapses. Three extended studies of audit failure anchor the discussion of public expectations: Arthur Andersen at Enron, the audit of Bernard Madoff Investment Securities, and Phar-Mor.

Three Iowa case studies apply the rules directly: a tax practitioner with no audit experience who wants to perform audits without obtaining a firm permit; a CPA who has resigned a difficult client and then receives a Board letter about that client's complaint; and a tax practitioner who completed ten compilation engagements and wonders whether peer review applies to him.

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 Iowa Rules of Professional Ethics and Conduct.
3. Recognize the ethical standards contained in the AICPA Code of Professional Conduct.