You are the tax manager in a CPA office. One of your clients, Snapper Corp, is...

You are the tax manager in a CPA office. One of your clients, Snapper Corp, is also an audit client of the firm. The CFO of Snapper invites you and the audit manager for a one-week deep-sea fishing trip to Mexico, all expenses to be paid by Snapper. The audit manager says that you both should go and just not tell your supervisor at the CPA firm any details (like who paid the expenses) about the trip. Cite the AICPA Code of Professional Conduct to support your answer to the following:

Expert Solution

AICPA Code of Professional Conduct

The value of auditing is dependent on the public perceptions of the independence of an auditor. Since the auditor is reporting to the third party who are the users, external to the company and if those users believe that auditor lacks independence then the whole purpose of audit is failed. That’s why it is important that independence is maintained.

As per AICPA’s Professional Code of Conduct (Independence Rule )

Independence consist of two components. First one is Independence of Mind (also refers to as Independence in Fact) which implies that the auditor should not be biased toward your client and work with integrity, have a character of intellectual honesty and candour, and objectivity.

Second one is Independence of appearance. Appearance here implies that an auditor should not be seen advocating for the client. Auditor can be seen advocating for the client if on regular basis he is hanging out with the client like going for wine and dine or playing golf with the client or like going on vacation with the client. An auditor may still be independent in fact but in appearance it will be perceived by the informed third party having knowledge of all relevant information that the auditor’s integrity, objectivity and professional scepticism has been compromised.

So, the Professional code of conducts requires that auditor should maintain independence both in fact and in appearance.

In the present scenario as a Tax Manager in a CPA office i.e. member of CPA, it is not advisable to go on a Fishing trip with the client because it will lead to a breach of independence in appearance as discussed above.

As far as audit manager is concerned he also has an equal responsibility to maintain independence, and adhere to professional ethics, integrity, intellectual honesty and objectivity.

ekkarill92 answered 1 year ago

You are a CPA paid to prepare tax returns for various clients. One of your newest...

You are a CPA paid to prepare tax returns for various clients. One of your newest clients is a “blended family”. Both adults are separated and each claims Head of household filing status. Each taxpayer also claims a different child for the HOH status. All individuals in this family use the same address. Discuss how you would handle this situation.

Assume you are a CPA and during a review of your clients' tax papers for completion...

Assume you are a CPA and during a review of your clients' tax papers for completion of the client’s tax return, you discover certain deposits to your client’s accounts that you suspect may be additional income which your client did not advise you about. When you ask the client about the deposits they say “let’s just make that our secret.” What are your ethical obligations in this situation and what authority did you use to determine your obligation?

You are working as an accountant at a mid-size CPA firm. One of your clients is...

You are working as an accountant at a mid-size CPA firm. One of your clients is Bob Jones. Bob’s personal information is as follows: DOB: October 10, 1952 SSN: 444-00-4444 Marital Status: Single Home Address: 5100 Lakeshore Drive, Pensacola, FL 32502 Bob has a very successful used car business located at 210 Ocean View Drive in Pensacola, Florida. Last year, you filed a Schedule C for Bob that had $1,200,000 in taxable income. The business will have an income growth...

You are Adam Rogers, CPA. The VP of one of your clients, Relient Corporation, emailed you...

You are Adam Rogers, CPA. The VP of one of your clients, Relient Corporation, emailed you the following message: Adam, I was at a conference today and they were talking about some new lease regulations and how that may impact our financial statements. I know that we have a couple of leases, one that we record as a liability and one that we do not. How will this new lease requirement impact us? When does this go into effect? Will...

Suppose you are doing an internship at a local tax office. Your manager, asks you to...

Suppose you are doing an internship at a local tax office. Your manager, asks you to prepare a simple income statement using the following list of accounts to test your basic knowledge of financial reporting. Accounts Cash/Million Dollars/ Depreciation 25 General Management Expenses 22

As the office manager of the Mercy hospital, one of your goals is to improve the...

As the office manager of the Mercy hospital, one of your goals is to improve the efficiencies of hospital operation. You heard that RFID is a viable option to pursue. Perform research on RFID technology and its application to the healthcare industry. Select three types of RFID applications that will work for your hospital and develop a report.

You are the manager of an investment fund. Your job is to advise clients on what...

You are the manager of an investment fund. Your job is to advise clients on what portfolio best suits their needs, given their characteristics. You have four different client types. I. A 23 year old woman (Vanessa), who has just begun a long and hopefully successful career as a nurse. II. A couple (Eddy and Eliza), both 41 years of age and have two young children. Both earn high incomes and wish to retire at the age of 60. III....

You are a CPA being paid to prepare a tax return for a client. Your client...

You are a CPA being paid to prepare a tax return for a client. Your client has a maid that cleans their house twice a week, and is paid about $3,000 per year. You notice your client has not been reporting, withholding, or paying any taxes on the wages of this household employee. When you bring this issue up to your client, they are quick to reply that the maid is a part-time employee and not subject to the “nanny...

Henry Owens, CPA works in a local accounting firm. He is the tax manager on a...

Henry Owens, CPA works in a local accounting firm. He is the tax manager on a major client in the office. The firm prepares compiled financial statements for the client on a quarterly basis. The client was impacted by the BP oil spill off the Gulf coast, and the client would like to engage Henry to help the business prepare a claim for damages from BP. The client would like to pay Henry on a contingent fee basis where Henry...

1. Jessica and Mike are new clients at your obstetrics office. You are asking them about...

1. Jessica and Mike are new clients at your obstetrics office. You are asking them about the reason for their visit. Jessica says she thinks she is pregnant because she missed a period. Mike tells you Jessica is always nauseated in the morning and eats all the time the rest of the day. They have not been using birth control and have wanted to have children since they got married last summer. Jessica says her clothes are feeling tighter and...

Question