Reference no: EM13517007

Auditing P 4-22 Each of the following situations involves possible violations of the AICPA's Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases in which it is violation, explain the nature of the violation and the rationale for the existing rule.

a. Pickens and Perkins, CPAs, are incorporated to practice public accounting. The only shareholders in the corporation are existing employees of the organization, including partners, staff members who are CPAs, staff members who are not CPAs, and administrative personnel.

b. Fenn and Company, CPAs, has a sophisticated network-based computer server that supports the firm's technology systems and databases. Because of excess capacity available on the server, Fenn and company agreed to maintain on its server accounting records for one of Fenn's nonpublic audit clients, Delta Equipment Company.

c. Godette, CPA has a law practice. Godette has recommended one of his clients to Doyle, CPA. Doyle has agreed to pay Godette 10% fo the fee for services rendered by Doyle to Godette's client.

d. Theresa Barnes, CPA, has an audit client, Smith, Inc., that uses another CPA for management services work. Barnes sends her firm's literature covering its management services capabilities to Smith on a monthly basis, unsolicited.

e. A bank issued a notice to its depositors that it was being audited and requested them to comply with the CPA's effort to obtain a confirmation on the deposit balances. The bank printed the name and address of the COA int he notice. The COA has knowledge of the notice.

f. Myron Jones, CPA, is a member of national CPA firm. His business card includes his name, the firm's name, address, and telephone number, and the title IT consultant.

g. Gutowski, a practicing CPA, has written an article about international accounting standards that is being published in a professional publication. The information which Gutowski has approved, includes his academic degrees, other articles he has had published in professional journals, and a statement that he is an expert on international accounting standards.

h. Ralph Williams is the partner on the audit of a nonprofit charitable organization. He is also a member of the board of directors, but this position is honorary and does not involve performing a management function.

i. Poust, CPA, as sold his public accounting practice, which includes bookkeeping, tax services, and auditing, to Lyons, CPA. Poust obtained permission from all audit clients for audit-related working papers before making them available to Lyons. He did not get permission before releasing tax- and management services-related working papers.

j. Murphy and Company, CPA's is the principal auditor of the consolidated financial statements of Lowe, Inc. and subsidiaries. Lowe accounts for approximately 98% of consolidated assets and consolidated net income. The two subsidiaries because he deems this necessary to warrant the expression of an opinion.