Which statement best describes competence as defined in the aicpa code of professional conduct chegg?

Editor: Roby B. Sawyers, CPA, Ph.D.

Standards are the foundation of a profession. The AICPA has established general standards for all CPAs in the AICPA Code of Professional Conduct (the Code). The Code applies to all AICPA members, setting standards for CPAs and establishing basic responsibilities to:

• Serve the public interest, honor the public trust, and demonstrate a commitment to professionalism;
• Perform all professional responsibilities with the highest sense of integrity;
• Maintain objectivity and be free of conflicts of interest in discharging professional responsibilities;
• Be independent in fact and appearance when providing auditing and other attestation services;
• Discharge professional responsibilities with competence and diligence.

In 1964, the AICPA released the first of 10 Statements on Responsibilities in Tax Practice (SRTPs) that supplemented the Code then in effect by setting best practices for members who prepared tax returns. The SRTPs, released between 1964 and 1977, became de facto enforceable standards of professional practice for CPAs providing tax services. The courts, the IRS, state accountancy boards, and other professional organizations recognized and relied on the SRTPs as the appropriate articulation of professional conduct in a CPA's tax practice. The AICPA Tax Executive Committee (TEC) subsequently determined standards were needed for tax practices. The SRTPs were the basis for the first Statements on Standards for Tax Services (SSTSs) issued in ­August 2000.

The original SSTSs largely mirrored the predecessor SRTPs to alleviate concerns regarding enforceability of the standards. Over time, the SSTSs have been revised to address tax law changes and clarify issues as requested by members. Two interpretations and several guidance documents issued in the form of FAQs have also been released to supplement the SSTSs.

The SSTSs have been extremely useful and will continue to be relevant authority. However, changes in tax practice, including changes in technology and law, have created a tax environment unrecognizable from even 10 years ago. To address these changes in the profession, the TEC authorized the formation of a task force to review and update the SSTSs in September 2018. The task force has formed three subgroups to draft revised SSTSs. The draft SSTSs will be reviewed by the Tax Practice Responsibilities Committee (TPRC) and the Professional Ethics Executive Committee before they are submitted for approval to the TEC. (See the box, "TPRC Membership," below, for a list of TPRC members.) Following approval, the new SSTSs will be sent to AICPA members for comment prior to adoption.

Review of existing standards

This review of the existing standards is not undertaken lightly. Each existing standard is being carefully reviewed to ensure relevancy to current tax practice, while also modifying wording where clarification or simplification will enhance the existing standard. The project to update the existing SSTSs is not an overhaul of the existing standards. The standards will be updated only as needed. The task force is carefully considering each topic and will modify or propose additional standards only if the proposed change or addition:

• Is necessary;
• Answers an existing question or addresses an area of importance to the profession;
• Has broad applicability;
• Is realistic and enforceable;
• Is clearly and simply explained; and
• Enhances the state of the profession.

In addition to reviewing and updating the existing standards, the task force is evaluating methods to make the format of the SSTSs more user-friendly. The current SSTSs include a series of seven statements on:

1. Recommending tax return positions or preparing or signing tax returns;
2. Signing tax returns if any questions on the return are not answered;
3. Examining or verifying supporting data when preparing a tax return;
4. Using estimates in the preparation of a tax return;
5. Departing from a tax return position previously concluded in an administrative proceeding or court decision;
6. Applying standards for members who become aware of an error in a previously filed tax return or a failure to file a required tax return; and
7. Determining the form and content of tax advice provided to taxpayers.

Each statement includes numbered paragraphs in three parts: an introduction, the statement(s), and explanation(s). The task force is currently planning to maintain this general format. However, the statements themselves are not currently grouped in a logical order. The task force is evaluating whether the statements can be grouped more logically around tax practice areas, such as tax compliance services, tax consulting and planning services, and tax controversy services. The goal of such a reorganization is to provide a logical structure that allows members to quickly find the answer to an issue based on the service being provided.

The remainder of this column discusses some of the subjects being evaluated for consideration as proposed new standards by the task force. As the project remains in progress, the ­updated SSTSs may not reflect every topic discussed below.

Proposed new standards

Data security and privacy

Potentially the most significant challenge facing members providing tax ­services today is the protection of ­taxpayer data. In addition to taking basic steps to protect taxpayer data and maintain the confidentiality of client records, members are required to comply with an ever-increasing web of laws and regulations protecting individual data, such as the Gramm-Leach-Bliley Act, P.L. 106-102, the European Union's General Data Protection Regulation, and specific state regulations including the soon-to-be-effective California Consumer Privacy Act. The parameters of data security and privacy are complicated and constantly changing. Even security recommendations that were once considered a best practice, such as mandating frequent password changes, are regularly challenged as hackers develop new methods to steal taxpayer data.

With that in mind, the task force is developing a standard that establishes basic member responsibilities to protect client data without establishing specific requirements that could quickly become outdated. The task force is also reviewing current statutory and regulatory requirements to prevent inconsistencies and overlap between competing ­member requirements.

Tax quality control

The proposed standard on quality control would require members with a tax practice to establish quality-control ­procedures. These procedures would ­typically be laid out in a tax quality control document. AICPA Tax Section members have access to a sample Tax Practice Quality Control Guide that is updated annually by the TPRC and can be tailored to the needs of firms of all sizes, including sole proprietorships. This new standard would be similar to the related standard in Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), Section 10.36, Procedures to Ensure Compliance, which requires firms to have policies in place to comply with Circular 230 and follow their policies.

Taxpayer representation

This standard would set forth requirements and recommendations when representing a client before a taxing authority. These requirements would include items such as having technical competency in both the tax procedural aspects as well as the tax law involved in the representation, determining if any conflicts of interest arise before or during the representation, and considering if any potential criminal issues arise. The proposed standard also recommends the use of engagement letters to properly set a scope of the representation work that will be done for the client.

Reliance on tools

This standard relates to technology. Tax practitioners increasingly rely on various tools to help their clients. While this reliance may be appropriate in many situations, the new standard highlights the tax practitioner's responsibility to ensure tax returns are accurately prepared. For example, while tax software may calculate a Sec. 199A qualified business income deduction, it is still the practitioner's responsibility to ensure the software's calculation is correct.

Document retention

The last proposed standard focuses on document retention. While some federal and state laws require document retention in certain circumstances, this new standard aims to encourage practitioners to provide clients with specific details of the firm's document retention policy. These agreements are usually outlined in engagement letters or can be a separate agreement depending on the engagement.

Comments sought

The task force is seeking comments on how to update the SSTSs from those who have firsthand perspectives on the challenges facing today's tax practitioners. Please send your input to Henry J. Grzes, CPA, lead manager—Tax Practice & Ethics, at Henry.Grzes@aicpa-cima.com, by Jan. 31, 2020. Comments will be shared with the task force.  

TPRC membership

The AICPA Tax Practice Responsibilities Committee (TPRC) has established a task force to examine changes to the Statements on Standards for Tax Services to reflect changing laws and the needs of today's practitioners. The committee comprises the following volunteer members, along with an AICPA staff liaison:

• David J. Holets, chair, Crowe LLP, Indianapolis
• Lea A. Fletcher, member, KPMG LLP, Charlotte, N.C.
• Nicolas M. Preusch, member, PBMares LLP, Fredericksburg, Va.
• Thomas J. Purcell III, member, Creighton University, Omaha, Neb.
• Heidi A. Ridgeway, member, Grant Thornton LLP, Chicago
• Stephanie S. Saunders, member, Saunders & Saunders PC, Virginia Beach, Va.
• Gerard H. Schreiber Jr., member, Schreiber & Schreiber CPAs, Metairie, La.
• Norma J. Schrock, member, Ernst & Young LLP, Washington, D.C.
• Joseph J. Tapajna, member, University of Notre Dame, Notre Dame, Ind.
• Christopher J. Wittich, member, Boyum Barenscheer PLLP, Minneapolis
• Henry J. Grzes, staff liaison, AICPA, Durham, N.C.

Which of the following best describes competence?

Which of the following phrases is used in the aicpa code of professional conduct to describe integrity?

Is the code of professional conduct infallible?