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Running head: PROFESSIONAL ETHICS AND THE LEGAL LIABILITY OF CPA 1 Professional Ethics and the Legal Liability of CPAs Joey D. Finley Kaplan University Auditing AC410 Bradley Cochran September 01, 2012 PROFESSIONAL ETHICS AND THE LEGAL LIABILITY OF CPA 2 Professional Ethics and the Legal Liability of CPAs Questions Requiring Analysis: 3-31 Ron Barber, CPA, is auditing the financial statements of DGF, Inc., a publicly held company. During the course of the audit, Barber discovered that DGF has been making illegal bribes to foreign government officials to obtain business, and he reported the matter to senior management and the board of directors of DGF. a. If management and the board of directors take appropriate remedial action, should Barber be required to report the matter outside the company? No, the matter does not require Barber to report outside the company if applicable and suitable corrective action has been taken within the company by the management and the board of directors (Whittington & Pany, 2012). b. Describe Barbers appropriate response if management and the board of directors fail to take appropriate remedial action. If remedial actions are not taking then the Private Securities Act requires that auditors report a matter outside of a company. In not being given appropriate remedial action would lead to expect that the wrong doer to discontinue their resignation as an auditor. This result must be informed to the customers board of directors. Management has one day to send the statement to the SEC (Whittington & Pany, 2012). Problems: 3-43 Thomas Gilbert and Susan Bradley formed a professional corporation called Financial Services Inc.A Professional Corporation, each taking 50 percent of the authorized common stock. Gilbert is a CPA and a member of the AICPA. Bradley is a CPCU (Chartered Property PROFESSIONAL ETHICS AND THE LEGAL LIABILITY OF CPA... View Full Document

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