Section 1: 15–25%A3

Ethics and Independence

Exam insight

Expect 3-5 MCQs per sitting -- ethics and independence are among the most heavily tested AUD topics. The bait is usually an indirect financial interest with a dollar amount that sounds small, nudging you toward 'not impaired' when the interest is actually material to the CPA. A detail many candidates miss: under the AICPA Code's nonattest services rules (ET 1.295), the self-review threat has safe-harbor provisions for nonissuers that do not apply to issuers under SOX. Key standards: AU-C 200 (professional skepticism and objectivity), AICPA Code of Professional Conduct ET 1.200-1.299 (independence rules), and SOX Sections 201-206 (issuer prohibitions).

What AICPA wants you to know

1Identify the conceptual framework approach to independence
2Distinguish between independence in fact and independence in appearance
3Apply the threats and safeguards approach to independence
4Recognize prohibited financial interests and relationships
5Understand the AICPA Code of Professional Conduct requirements
6Apply SOX independence requirements for issuers

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Independence QuestionSpot the threat, decide if it impairs, then apply the safeguard or rule.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.