Question

The following are situations that may violate the Code of Professional Conduct. Assume, in each case, that the CPA is a partner unless stated otherwise. 1. Jon Davis is a partner at DH Audit firm. He did an advertisement for the audit firm stating that the firm can perform various accounting and auditing functions with very competitive audit fees. The advertising also claims that the audit fees are among the lowest fees charge by any audit firm. 2. Elbert Watson is a staff accountant at a CPA firm. Elbert's wife works in human resources at one of the clients audited by Elbert's firm, although Elbert is not on the audit engagement. As part of an employee stock ownership program at her company, Elbert's wife receives a high number of shares of stock in her company. 3. Jane Miller, CPA is doing her audit work in one of the public listed companies. She is invited by the client and attends the company's annual Christmas party. When the presents/gifts are handed out, she is surprised to find her name included. The present has a big value of approximately $2,000. 4. Micheal and Judy, CPAS, are performing consulting services to help the management of Worldwide IT Technology to examine its business operations efficiency. Micheal and Judy structured the fee for this engagement to be a fixed percentage of cost savings that result once the new processes and strategies are implemented. Micheal and Judy also perform other services such as bookkeeping and auditing services for this company. 5. Sarah Maxwell is the partner in charge of the audit of Trust Bank. While Sarah is doing her audit work, she applies for mortgage financing from Trust Bank to buy her new house. The loan was approved a few months after she has completed her audit work in Trust Bank.

Required: Discuss whether the facts in any of the situations indicate violations of the Code of Professional Conduct. If so, identify the nature of the violation(s).

Answer 1

Answer :

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