542 102271 Liyuan liu 2-17 a. First, it is a violation. I t violates the rule of Independence.
Mario Danielli is the partner on the audit of the organization and at the same time he is a member for the board of directors. No matter the position is honorary or not, Mario Danielli is not independent from the organization. The advocacy threat and familiari ty threat both possibly can be exist. Even if Mario can be independent in fact, but independence in appearance still can not be satisfied. The users potentially could believe Mario to be advocates for the organization so that most of the benefit of the audit function will be lost.
Rationale for independence: Independence in auditing means taking an unbiased viewpoint in the performance of audit tests, the evaluation of the results, and the issuance of the auditor's report. And the reason that many diverse users are willing to rely upon the professional public accountant's reports as to the fairness of financial statements is their expectation of an unbiased viewpoint.
b. I t is a violation. I t violates the independence rule.
Mar tha Painter is the director of the So Manufacturing Company in the position of Treasurer. Even So Manufacturing Company is audited by another partner in Ms. Painter's office, Ms.Painter owns 15 percent of the shares of So Manufacturing Company. That means there is a financial interest between them and i t obviously contain self-interest threat. Rationale for independence is same as the fi rst question's answer.
c. I t is a violation. I t violates the rule of Independence. O'Doyle agrees to pay 10 percent of the fee O'Doyle receives form Godette's client. There is a interest relationship between O'Doyle and Godette. And the client does not know that. Godette advertise O'Doyle for the benefit. I t violates the advertising and solicitation rules. And also O'Doyle is no longer independent because the interest relationship. Rationale for independence is same as the fi rst question's answer.
d. I t is a violation. I t violates advertising and solicitation rules.
Barner sends her fi rm's li terature its covering management services capabilities to Choi on a monthly basis unsolicited. Barner openly solicit client and engage in advertising over aggressive.
Rationale for the r ule of Advertising and Solicitation: I t harms the reputation of the profession and at least cannot enhance the profession's reputation.
e. There is no violation for the rules of conduct. This is not related to any professional accountants.
f. I t is a violation. I t violates the rule of Due Care
Edward Golikowski inadvertently stated that they covered five years instead of
three years. And he didn't check assumptions and do the filed work. He just redid the client's calculations and attached an assurance report.
Rationale for due care: The public accountant has a legal duty of care to certain users of financial statements. I t means the application by a professional of a level of care and skill in accordance with what would reasonably be expected of a person of his rank and t raining.
g. I t is a violation. I t violates the rule of Confidentiality.
The rule of confidential information states that client information that may not be disclosed without the specific consent of the client except under authoritative professional or legal investigation. Here Marcel sale their client's information for his own interest . Even he got all audit clients `s permission for the audit-related working papers. He did not get permission before releasing tax-and management services-related working papers. The confidential nature requirement allies to all services provided by public accounting fi rms, including tax and management services.
Rationale for Confidentiality: During an audit or other type of engagement, practitioners obtain a considerable amount of information of a confidential nature, including officers' salaries , product pricing and advertising plans, and product cost data. If auditors divulged this information to outsiders or to client employee who have been denied access to the information, their relationship with management would be strained and, in extreme cases, would cause the client harm.