Section R4-1-455.01. Professional Conduct: Competence and Techni- cal Standards

A.       Competence: A registrant shall not undertake an engagement to perform professional services that the registrant cannot rea- sonably expect to complete with due professional competence, including compliance, where applicable, with subsections (B) and (C).

B.       Auditing standards: A registrant shall not permit the regis- trant’s name to be associated with a financial statement in a manner that implies that the registrant is acting with indepen- dence with respect to the financial statement unless the regis- trant has complied with applicable generally accepted auditing standards.

C.       Accounting principles: A registrant shall not express an opin- ion that a financial statement is presented in conformity with generally accepted accounting principles if the financial state- ment contains any departure from an accounting principle that has a material effect on the financial statement taken as a whole, unless the registrant can demonstrate that by reason of unusual circumstances that the financial statement would oth- erwise be misleading. In this case, the registrant’s report shall describe the departure from an accounting principle, the approximate effects of the departure, if practicable, and the reasons why compliance with the principle would result in a misleading statement.

D.       Accounting and review standards: A certified public accoun- tant, public accountant, or firm shall not permit the certified public accountant, public account, or firm’s name to be associ- ated with an unaudited financial statement or other unaudited financial information of a non-public entity in a manner that implies the certified public accountant, public accountant, or firm is acting as an independent accountant unless the certi- fied public accountant, public accountant, or firm has com- plied with all applicable standards for accounting and review services.

E.       Forecasts and projections: A certified public accountant, pub- lic accountant, or firm shall not permit the certified public accountant's, public accountant's, or firm’s name to be used in conjunction with any forecast of future transactions in a man- ner that may lead to the belief that the certified public accoun- tant, public accountant, or firm vouches for the achievability of the forecast or projection.

F.       In expressing an  opinion on  representations in  a financial statement that the certified public accountant, public accoun- tant, or firm has examined, a certified public accountant, pub- lic accountant, or firm violates A.R.S. § 32-741(A)(4) if the certified public accountant, public accountant, or firm:

1.        Fails to disclose a known material fact that makes the financial statement misleading;

2.        Fails to report a known material misstatement that appears in the financial statement;

3.        Is materially negligent in the conduct of the examination or in making a report on the examination;

4.        Fails to acquire sufficient information to warrant expres- sion of an opinion, or the exceptions are sufficiently material to negate the expression of an opinion; or

5.        Fails to direct attention to any material departure from a generally accepted accounting principle or disclose any material omission of a generally accepted auditing proce- dure applicable under the circumstances.

6.        The provisions of subsection (F) are not intended to be all-inclusive or to limit the application of A.R.S. § 32- 741(A)(4).

G.      Tax practice standards: A certified public accountant, public accountant, or firm shall exercise due diligence in the conduct of tax practices. The Board shall view the current standards in the American Institute of Certified Public Accountants State- ments on Responsibilities in Tax Practice to presumptively represent due diligence.

H.      Standards: The application of standards such as “generally accepted accounting principles,” “generally accepted auditing standards,” and “applicable standards for accounting and review services” by a certified public accountant, public accountant, or firm is to be made to the specific engagement or problem at hand by the exercise of professional judgment in the context of the literature of the accounting profession. The Board considers official statements of the Financial Account- ing Standards Board, the American Institute of Certified Pub- lic Accountants, and other specialized bodies  dealing with accounting and auditing matters to be persuasive sources for interpretation of the standards. Persons who take positions that depart from the official statements shall be prepared to justify them.

Historical Note

Section R4-1-455.01 renumbered from R4-1-455(B) and amended effective April 22, 1992 (Supp. 92-2). Amended

effective November 20, 1998 (Supp. 98-4). Amended by

final rulemaking at 20 A.A.R. 520, effective February 4,

2014 (Supp. 14-1).