Richard is an accountant who is close to retirement at Canvas Industries. Since he does not...

Richard is an accountant who is close to retirement at Canvas Industries. Since he does not have much time left with the company, he has been a little careless with the preparation of the company’s statement of cash flows. The ending cash balance does not match the cash balance on the balance sheet, but Richard forces it to balance with a plug figure. Which AICPA code is violated

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Expert Solution

The AICPA code that is being violated by Richard in this case is the code of due care principle. As per the due care principle of AICPA a member should observe the profession’s technical standards and ethical standards. The members are required to strive continuously so as to improve their level of competence and the quality of services rendered by them. The members have a responsibility to provide services in a manner that is best to their ability.

In this case Richard did not properly prepare the cash flow statement as the closing numbers from the cash flow statement did not match with the cash balance figure in the balance sheet. As such Richard has not observed and adhered to the mandated technical standards of the profession as per the AICPA code. He has not prepared the financial statements in general and cash flow statement in particular to the best of his ability. Using of a plug figure is not the solution and Richard has compromised on the quality of service rendered by him.

jeff jeffy answered 11 months ago

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