Reference no: EM13858030

Prepare assignments related to newly revised AICPA code of conduct. Make sure to use a research memo format for submissions. A sample tax research memo is attached FYI. However, an accounting research memo is all right.Case #1 Facts: Mary is a CPA and partner in the firm of Downey, Morgan and Spencer LLP (DMS), Centennial, Colorado. Mary also holds the CFE designation. She is a member of the COCPA, AICPA, and the ACFE.

During Mary's 23-year tenure with DMS she has had a variety of clients and engagements. This year, one of her larger closely-held clients, Joseph Tang, branched out into a legal marijuana business, Green Heaven Inc. (GHI). Mary serves as partner-in-charge of all engagements related to this client. Her engagement team generally consists of a tax manager, an IT consultant, and two junior staff members from the audit and financial reporting side of the firm's practice. For the new marijuana business engagement, DMS hired Mary's son, Andrew, as a per diem consultant.

Mary and her team assisted GHI into quickly becoming one of the larger Colorado retail dispensaries and wholesale distributors of marijuana. Mary personally learned much about the nuances of this new Colorado industry.

Mary, her son, and her sister decided to go into the legal marijuana business. The family organized as a Colorado Limited Liability Company (LLC). Mary holds 80% of the equity in the LLC. She obtained proper licensing for all aspects of the business.

Since Mary's family owns a small farm near Brighton, Colorado, the LLC set up growing and production at that location. Andrew manages the Brighton part of the business. Mary's sister, Annie, manages the retail sales through a leased store-front in Lone Tree, Colorado. Mary, Andrew, and Annie are unmarried persons.

Mary is very happy with her partnership in DMS. She has no plans to give it up. She likes her client base, the diversity of her work, and her partners. Mary is also pleased with her new business endeavors. However, as soon as her new business was established, Mary turned over all aspects and engagements of her client, Joseph Tang, to another partner at DMS. She made full disclosure of her other business to the DMS partners.

A dilemma has arisen: Marijuana is deemed a controlled substance by the Federal Government and is thus, illegal from a Federal viewpoint. Mary wonders if she is violating any rules or principles of the Code of Professional Conduct. Specifically, she is concerned about the provision, Acts Discreditable.

Required:

A. Help Mary resolve her dilemma. Use the online, searchable version of the AICPA Code of Professional Conduct.

Determine the Code's definition of Act Discreditable.' (Note: an example is not a definition. An example is merely an elaboration.)

1. Use the Rules of the Code and Principles where necessary, to arrive at your answer.

2. Note: The IFAC Code, i.e. IESBACode of Ethics may be helpful in getting your arms around the issues.

B. Write a formal research memo to Mary describing your conclusions.

1. The style of the memo can be either the tax research format or the GAAP research format. (An example of a tax research memo to the file is posted at Blackboard).

2. Assistance with style and format can be also obtained from Effective Writing: A Handbook for Accountants, 10th Edition. Claire B. May &Gordon S. May (Prentice Hall, 2015). Earlier editions will generally work.

Case #2 Facts: Findley Santos is a staff auditor in the CPA firm of Downey, Morgan and Spencer LLP (DMS), Centennial, Colorado. DMS has firm membership in the AICPA and COCPA. Findley has worked for DMS for 2½ years since graduating with aMPAcc degree from Metro State. He has passed 3 parts of the CPA exam and is confident about passing the 4th part.

DMS has several clients in the banking industry. One of them is 3rd State Bank of Elizabeth, Colorado. Findley has worked on the audit engagement of this bank since he began with DMS.

Findley's significant other, Claudia Murray, happens to be a vice president of 3rd State Bank of Elizabeth. Findley and Claudia have been together as a couple for about 4 years. They share a residence in Highlands Ranch, Colorado. They do not hold themselves out as a married couple; they do not co-mingle finances nor share ownership in vehicles.

A dilemma has arisen: Findley is concerned that there may be independence impairment related to his work on the 3rd State Bank audit. Claudia's work at the bank is certainly critical to the financial reporting side of the bank's operation. The DMS partner-in-charge of the 3rd State Bank engagement (Randi Smith-Thomas) is aware of Claudia and Findley's relationship. She glossed over the independence issue with Findley simply because the couple is not married. It never crossed her mind to explore the issue of independence any deeper.

Required:

A. Help Findley resolve his dilemma. Use the online searchable version of the AICPA Code of Professional Conduct.

1. Determine how the Code reflects the independence component of the attest function especially related to....‘threats' and ‘safeguards'.

2. Use the Rules of the Code and Principles where necessary, to arrive at your answer.

B. Write a formal research memo to Randi Smith-Thomas and Findley describing your conclusions.Use the necessaryformat noted above.

Case #3 Facts: Helen Vorhees is a senior manager in the CPA firm of Downey, Morgan and Spencer LLP (DMS), Centennial, Colorado. DMS has firm membership in the AICPA and COCPA. Helen has worked for DMS for 5 years since being recruited away from Grant Thornton LLP, because of her specialty in international taxation. She is a CPA and is a member of the AICPA and COCPA.

On September 9, 2015, DMS held a recruiting and social event at Dave & Busters onSouth Colorado Boulevard in Denver. About 35 students from Colorado colleges and universities attended; 12 professional staff members of DMS were also present. Heavy hors d'oeuvres, soft drinks, wine and beer were available for attendees.

At about 8:00 p.m., Helen said her "goodbyes," departed the building and began her drive south on I-25 toward her home in Highlands Ranch. After a few miles she was pulled over by a Denver PD officer for exceeding the speed limit. She immediately knew it; she had a tendency to push the limits with her new Lexus IS 350. When the officer began her discourse about speeding, she hesitated and asked, "Have you been drinking?" Helen then remembered the glasses of Pinot Noir she had consumed during the past few hours. Helen said nothing to the officer. She asked Helen to step out of her car and gave her a breathalyzer test. She recorded a 0.06 BAC and was ticketed for a DWAI. The speeding issue was apparently ignored at that time. This ticket is her first for DWAI/DUI.

While Helen and the officer were standing on the roadway shoulder, Gus Lawrence and Angelica Somers, two colleagues from DMS who had been car-pooling to the recruiting event pulled in behind the parked vehicles. They offered to drive Helen home. Gus drove Helen's car, and Helen rode with Angelica.

A dilemma has arisen: Helen is concerned that there may be a CPA ethics violation because of the DWAI ticket.

Required:

A. Help Helen resolve her dilemma. Use the online searchable version of the AICPA Code of Professional Conduct.

B. Write a formal research memo to Helen describing your conclusions.Use the appropriateformat noted in above.