Which of the following situations most likely represents a violation of the AICPA Code of Professional Conduct regarding 'Acts Discreditable'?

Answer options:

The CPA refuses to provide the client with the CPA's own working papers because the fees have not been paid.

The CPA retains client records after the client has demanded their return, in an attempt to enforce payment of overdue fees.

The CPA advertises services claiming to be an 'expert' in tax matters.

The CPA files a personal bankruptcy petition.

How to approach this question

Distinguish between 'Client Records' (must return) and 'Auditor Working Papers' (auditor property).

Full Answer

B.The CPA retains client records after the client has demanded their return, in an attempt to enforce payment of overdue fees.✓ Correct

The CPA retains client records after the client has demanded their return, in an attempt to enforce payment of overdue fees.

The 'Acts Discreditable' rule specifically prohibits retaining client-provided records (records provided to the CPA by or on behalf of the client) after a demand is made for their return, regardless of fee disputes.

Common mistakes

Confusing client records with auditor-prepared working papers.

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