Week 3 HW - Chapter 4. 4-20. a. This is a violation because...

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Chapter 4. 4-20. a. This is a violation because the CPA firms are prohibited from performing nonaudit services for public companies that are audit clients. b. This is not a violation . c. This is not a violation if this private company is not audit client. d. This is a violation because CPAs are allowed to provide tax services for audit clients, except for tax avoidance planning services. e. This is a violation for the same reason stated in the situation (a). f. This is not a violation because this is a private company. 4-21. a. This is not a violation of Rule 101 (Independence) because Jose Martinez is not a partner and he does not participate in the client’s audit. b. This is a violation of Rule 201 (General Standards) because according to this rule, Bacon, by accepting professional engagement, should have the necessary competence to complete this engagement. Bacon has violated this rule because of the highly technical nature of the work; he is not able to review this work. c. This is a violation of the rule 102 (Integrity and objectivity). Phyllis Allen should not complete the return without a proper client’s support for deductions. d. This is a violation of the rule 202 (Compliance with standards). The AICPA designated the IASB as the body to establish professional standards with respect to international financial accounting and reporting principles. In this situation, Sally did not use the correct standards in her work. e. This is a violation of the rule 102 (Integrity and objectivity). According to this rule, in performing any professional service, a member should maintain objectivity and integrity and should be free of conflicts of interest. However, in this situation, there is a conflict of interest and duties because Bill asks his own firm to review the adequacy of the insurance coverage for existing clients. f. This is a violation of the rule 301 (Confidential client information) because the firms should obtain client’s authorization before the review takes place. g. This is not a violation of the rule 501 (Acts discreditable) because he did not violate any
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This note was uploaded on 07/09/2011 for the course ACCT 307 taught by Professor 1 during the Spring '10 term at Strayer.

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Week 3 HW - Chapter 4. 4-20. a. This is a violation because...

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