Regulatory Ethics
There are no prerequisites.

Course Description

This course is designed to meet the four-hour ethics CPE requirement for California CPAs. It provides an overview of ethical thought, covering the core values of the CPA profession and the application of these values to ethical reasoning. Covered in detail are applicable rules and statutes promulgated by the California Board of Accountancy, the California Accountancy Act, and the AICPA Code of Professional Conduct. Case studies are utilized throughout the course to highlight important issues.


Patricia McCarthy, MBA

Patricia McCarthy, MBA, is a partner at CFO Resources LLC, a company focused on training and courseware for CPAs. Her focus is on Microsoft products, particularly Excel, and how to use these programs effectively in business. She’s also certified as an MOS expert in Excel. Patricia has been in software training for over 20 years, and her client list includes the Indiana CPA Society, which awarded her its Outstanding Discussion Leader award.

She has been a contributor to the Journal of Accountancy and has published articles in several CPA society magazines, including societies in Indiana, Missouri, Texas, and Arizona.

Patricia is a graduate of the College of the Holy Cross and also holds an MBA from Babson College. She was a full-time lecturer in Butler University’s School of Business for 6 years and has taught at several of Indiana’s other universities.

Patricia also has an extensive business background in audit and financial functions. She runs a blog called Chatting about Excel and More, and she writes self-study CPE courses on Microsoft Excel for Western CPE.

Joseph Helstrom, CPA

Joseph Helstrom, CPA, is a partner at CFO Resources, LLC, a company focused on training and courseware for CPAs. He’s also the owner of Mill Creek Publishing LLC. Joe has over 30 years of experience as a CPA in both public accounting and industry, with extensive experience in financial reporting and analysis, treasury, tax, information technology, legal and regulatory matters, and strategic planning.

After graduation from Butler University with a degree in accounting, Joe got his start at Ernst & Young. Subsequent to that, he has served for several different companies as a chief financial officer; director of treasury and tax; controller; and manager of financial planning, reporting, and analysis.

Joe and his wife, Patricia McCarthy, produce self-study courses for Western CPE and have published articles in Missouri and Texas CPA society publications titled “Incorporating Excel Arrays into Your Audit Plan.”

Course Specifics

Regulatory Ethics
Sep 24, 2019
There are no prerequisites.

Compliance Information

CTEC Provider #: 2071
CTEC Course ID: 2071-CE-1330
CTEC Ethics Credit: 2
Qualifies for CA Fraud: No

Learning Objectives

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

Chapter 1

  • Define ethics from an overall and professional perspective, noting the differences between morals and ethics
  • Note the ethical requirements in California pertaining to new licensees and CPE
  • Recognize the components and ethical thought process of the AICPA conceptual framework that that assists the CPA in evaluating threats in ethical issues and identifying possible safeguards to these threats

Chapter 2

  • Recognize the standards of professional conduct contained in Article 3.5 of the California Accountancy Act
  • Recognize the rules of professional conduct as contained in Article 9 of the California Board of Accountancy Regulations

Chapter 3

  • Recognize the ethical standards contained in the AICPA Code of Professional Conduct
  • Specify the action a CPA must take when there is a possible conflict of interest
  • Identify situations where a CPA's independence may or may not be impaired and what is considered an act discreditable
  • Identify threats and safeguards that are applicable to CPAs in public practice and in business

Table of Contents

Chapter 1 – Ethics Background

Learning Objectives


What is Ethics?

The Relationship of Morals and Ethics


Illustrative Examples of Ethics

Professional Ethics

Legal vs. Ethical

Why Should We Study Professional Ethics?

Accounting Ethics

Ethical Core Foundations for CPAs




Public Interest

Due Care

Chapter 1 – Review Questions

Ethical Reasoning

Case Studies – Threats and Safeguards

Ethical Dilemmas

Public Expectations of the CPA’s Responsibility

Motivations of Ethical Lapses

Chapter 1 – Review Questions

Chapter 2 – California Accountancy Statutes and Rules

Learning Objectives

Recent New Statutes and Rules

Trend in Recent California Board of Accountancy Enforcement Actions

The California Accountancy Act and the California Board of Accountancy Regulations

Article 3.5. Standards of Professional Conduct [5060 - 5063.10]

5060.  Name of Firm

5061. Commissions

5062. Report conforming to professional standards

5062.2. Restrictions on Accepting Employment with an Audit Client

5063. Reportable Events

5063.1. Reporting by Courts

5063.2. Reporting by Insurers

5063.3. Disclosure of Confidential Client Information Prohibited

5063.10. Restatements

Article 9- Rules of Professional Conduct

§ 50. Client Notification

§ 50.1. Attest Client Notification Regarding Composition of Firm Ownership.

§ 51. Firms with Nonlicensee Owners.

§ 51.1. Notification of Non-Licensee Ownership.

§ 52. Response to Board Inquiry

§ 53. Discrimination Prohibited.

§ 54. Confidential Information Defined, Exception.

§ 54.1. Disclosure of Confidential Information Prohibited.

§ 54.2. Recipients of Confidential Information.

§ 56. Commissions -Basic Disclosure Requirement.

§ 56.1. Commissions -Professional Services Provided to the Client.

56.2. Commissions -Disclosure Requirement and Other Rules of Professional Conduct.

§ 56.3. Commissions -Definitions.

§ 56.4. "Officer" and "Director."

§ 57. Incompatible Occupations/Conflict of Interest.

§ 58. Compliance with Standards.

§ 59. Reporting of Restatements.

§ 60. Reporting of Investigations by the Securities and Exchange Commission

§ 61. The Reporting of Settlements, Arbitration Awards, and Judgments.

§ 62. Contingent Fees.

§ 63. Advertising.

§ 65. Independence.

§ 67. Approval of Use of Fictitious Name

§ 68. Retention of Client's Records.

§ 68.1. Working Papers Defined; Retention.

§ 68.2. Identification of Audit Documentation.

§ 68.3. Retention Period for Audit Documentation.

§ 68.4. The Document Assembly Period and Subsequent Changes in Audit Documentation.

§ 68.5. Audit Documentation Retention and Destruction Policy.

§ 69. Certification of Applicant's Experience.

Case Studies

A Little Extra Income – Contingent Fees

Return of client provided records

§ 68. Retention of Client's Records.

Chapter 2 – Review Questions

Chapter 3 – The AICPA Code of Professional Conduct

Learning Objectives

About the Code


Part 1 – Members in Public Practice

Adverse interest threat

Advocacy threat

Familiarity threat

Management participation threat

Self-interest threat

Self-review threat

Undue influence threat

Rule 1.100 Integrity and Objectivity

Case Study – Married Tax Clients Divorcing

1.130 Preparing and Reporting Information

Case Study – Year End Adjustments and Loan Covenants

1.200 Independence

Chapter 3 – Review Questions

Rule 1.300 General Standards Rule


Case Study – Audit Engagement with No Prior Experience

1.310 Compliance with Standards Rule

Case Study – Peer Review Discoveries

1.320 Accounting Principles Rule

1.400.001 Acts Discreditable Rule

1.510.001 Contingent Fees Rule

1.520.001 Commissions and referral fees Rule

1.600.001 Advertising and other forms of solicitation

1.700.001 Confidential client information rule

1.800.001 Form of organization and name rule

Chapter 3 – Review Questions

Part 2 – Members in Business

Conceptual Framework Approach



2.100.001 Integrity and Objectivity Rule

2.130.030 Obligation of a Member to His or Her Employer’s External Accountant

Case Study – Fair Finance

2.300.001 General standards rule

2.310.001 Compliance with standards rule

2.320.001 Accounting principles rule

Case Study - The Company with Excess Reserves

Case Study - The Company with Undisclosed/Unrecorded Contingencies

2.400.001 Acts Discreditable Rule

2.400.070 Confidential Information from employment or volunteer activities

Part 3 – Other Members

3.400.001 Acts discreditable rule

3.400.070 Confidential Information from employment or volunteer activities

Chapter 3 – Review Questions

Review Question Answers and Rationales



Final Examination

Answer Sheet

Course Evaluation

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