In today’s presentation, we delve into the X Credible Rule, a cornerstone in the ethical framework for public accounting firms, specifically addressing CPA firms and their engagements. This rule outlines a set of principles that members must adhere to, promoting credibility, integrity, and ethical conduct within the profession.
X Credible Rule Overview:
The X Credible Rule encompasses various facets of professional conduct, including but not limited to:
- Discrimination and harassment in employment practices.
- Solicitation or disclosure of CPA examination questions and answers.
- Failure to file a tax return or pay tax liability.
- Negligence in the preparation of financial statements or records.
- Failure to comply with governmental bodies, commissions, or regulatory agencies.
- Improper use of confidential information obtained from employment or volunteer activities.
- False, misleading, or deceptive acts in promoting or marketing professional services.
- Improper use of the CPA credential.
Advertising and Solicitation Rules:
1. False, Misleading, or Deceptive Advertising:
- Prohibits advertising in a manner that is false, misleading, or deceptive.
- Caution against overreaching or harassing conduct in advertisements.
- Emphasizes the importance of truthful naming conventions, avoiding implications that are not factual.
2. Prohibited Forms of Advertising:
a. Creating false or unjustified expectations of favorable results. b. Implying an ability to influence any court, tribunal, regulatory agency, or similar body official. c. Claiming specific professional services and fees without disclosing the likelihood of substantial increases. d. Making representations likely to cause misunderstanding or deception to a reasonable person.
Form of Organization and Name:
1. Naming Conventions:
- Public accountants may practice only in a legal form of organization.
- Firm names must conform to legal regulations and resolutions of counsel.
- Names of past partners can be included in the firm name of a successor organization.
2. Use of AICPA Designation:
- A firm may not designate itself as a member of the AICPA unless every CPA owner is a member of the institution.
Conclusion:
Adhering to the X Credible Rule is paramount for public accounting firms, ensuring the highest standards of professionalism, integrity, and ethical conduct. By understanding and implementing these principles, CPA firms contribute to a credible and trustworthy financial environment for their clients and the broader community.