Top Posters
Since Sunday
36
18
s
13
13
12
g
6
N
6
o
6
6
h
5
l
5
i
5
New Topic  
spacemanspliff spacemanspliff
wrote...
Posts: 52
Rep: 0 0
2 months ago
The following situations involve a possible violation of the AICPA's Code of Professional Conduct. For each situation, (1) determine the applicable rule from the Code, (2) decide whether or not the Code has been violated, and (3) briefly explain how the situation violates (or does not violate) the Code.

a. Howard Cunningham & Co., CPAs, designates its firm as "Members of the American Institute of Certified Public Accountants." All of the partners of the firm are CPAs. However, one of the partners has recently chosen to allow her membership to lapse because of personal reasons.


Explanation:

b. Brad Long, CPA, was traveling from Orlando to Miami, Florida when he was pulled over by a police officer on suspicion of driving under the influence. He was convicted in court of driving while under the influence of alcohol. Because of past convictions, Brad was sentenced to 5 years in prison.


Explanation:

c. Kelley Brent, CPA, is a partner in a one-office CPA firm that audits Dane, Inc., a closely held corporation. Kelley's sister was recently appointed as the chief financial officer for Dane, Inc.


Explanation:

d. Sarah Martin, CPA, is a senior auditor in the San Francisco office of Cooper & Howell, CPAs. Sarah's father is employed as the controller of Line Electronics, a public company in Detroit, Michigan. Line Electronics is one of the firm's audit clients. Neither Sarah nor the San Francisco office is involved in the audit of Line Electronics.


Explanation:

e. On August 20, 20x9, Min Lee, CPA and partner, was offered and accepted the engagement to audit the annual financial statements of Jernigan Corporation for the year ended December 31, 20x7. Preliminary work began on the audit on September 15, 20x7 and the engagement ended on March 7, 20x8. Jernigan is regulated by the SEC. Min served as controller of Jernigan Corporation from December 1, 20x2, until April 10, 20x7, at which time she terminated her employment with Jernigan.


Explanation:
Textbook 

Auditing and Assurance Services


Edition: 17th
Authors:
Read 12 times
1 Reply
Replies
Answer verified by a subject expert
schmienceschmience
wrote...
Posts: 49
Rep: 0 0
2 months ago
Sign in or Sign up in seconds to unlock everything for free
More questions for this book are available here
a. Violation of the Form of Organization and Name rule (Rule 505). A firm may not designate itself as "Members of the American Institute of Certified Public Accountants" unless all of its owners are members of the Institute.

b. Violation of the Acts Discreditable rule (Rule 501). Felonies are considered acts discreditable.

c. Violation of the Independence rule (Rule 101). According to the Code, Kelly's sister is a "close relative" and she occupies a key position at an audit client. Because Kelly is a partner in the office that provides the audit services to Dane, the firm is not independent.

d. No violation of the Independence rule (Rule 101). While Sarah's father occupies a key position with an audit client of the firm, there is no independence violation as long as Sarah is not a member of the engagement team. The firm may provide the audit services.

e. Violation of the Independence rule (Rule 101). Since Min had an employment relationship with the client during part of the period covered by the financial statements, her independence is impaired.

This verified answer contains over 190 words.
1

Related Topics

wrote...

2 months ago
Brilliant
wrote...

Yesterday
this is exactly what I needed
wrote...

2 hours ago
Thanks
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  235 People Browsing
 378 Signed Up Today
Related Images
  
 287
  
 439
  
 76
Your Opinion
Which country would you like to visit for its food?
Votes: 83

Previous poll results: Where do you get your textbooks?