Reference no: EM131670468

Assignment

There are 4 parts to this assignment.

1. Answer the following questions using the online AICPA Code of Professional Conduct.

a. Give the specific citation for the section and paragraph(s) of the Code regarding the acceptance of contingent fees for professional services by a member in public practice.

b. Give the specific citation for the section and paragraph(s) of the Code that define the term "covered member."

c. Based upon that definition, indicate whether each of the following is a covered member given this situation. BuffCo is an audit client of the Amarillo office of Friske and Co. CPAs. Friske and Co. also has offices in Canyon, Lubbock, and Midland.

i. Darlene Pulliam is a partner in the Canyon office of Friske and Co. She does not work on the BuffCo audit.
ii. Brett Butler is a first year staff auditor who works on the BuffCo audit.
iii. Will Wesley is a partner in the Amarillo office of Friske and Co. He does not work on the BuffCo audit.
iv. Kat Keiser is a manager in the Amarillo office of Friske and Co. She is in charge of providing tax services to BuffCo.

d. A partner in a multioffice CPA firm owns 2% of a potential audit client. The engagement would be performed by an office with which he is not associated. The partner would not provide any services to the client nor be in a position to influence the engagement team. Is the firm independent to perform the audit? Give the citation for the section and paragraph(s) of the Code that support your answer.

e. What section should an auditor research to determine how to maintain independence when performing nonattest services outside the scope of the attest engagement? List three specific nonattest services mentioned in the Code and the specific section references for each.

f. Which rule in the Code prohibits amember in public practicefrom disclosing any confidential client information without the specific consent of the client?Give the Code section reference.

g. BuffCo's controller, Iris Avoid, an AICPA memberin business, fails to comply with applicable federal, state, or local laws or regulations regarding the timely filing of her personal tax return and fails to comply with applicable federal, state, or local laws or regulations regarding the timely remittance of all payroll and other taxes collected on behalf of others. She may be considered to be in violation of which rule? Give the rule name and specific Code section reference.

h. Iam Stressed, an accountant for BadBuff and an AICPA member in business, is pressured to become associated with misleading information and subordinates his judgment to that of someone associated with the employing organization (BadBuff) due to that individual's position, reputation, or expertise; aggressive or dominant personality; or attempts to coerce or exercise excessive influence over Iam. Which threat is described in this situation? Give the specific Code section reference.

2. Case 1.1 Enron Corporation (the high profile disaster that changed the face of auditing!)

a. Explain how consulting (nonaudit) services led to the demise of Andersen. Be specific and discuss this in terms of the threats to independence as put forth in the Conceptual Framework for Independence in the Code.

b. Mandatory audit firm rotation has recently been a hot topic in the US and Europe. Do you believe mandatory audit firm rotation would have prevented this disaster? Explain.

3. Case 5.3 Caesars Entertainment Corporation

a. Discuss the independence issue in this case.
b. Do you believe Adams had a substantive role in the 2008 and 2009 audits? Explain your answer.

4. Ernst & Young (E&Y) Independence Violations

Ernst & Young LLP agreed last year to pay $9.3 million to settle two cases in which the SEC said E&Y auditors had compromised the firm's independence because they had close personal relationships with executives of its audit clients.

a. Read the above articles and briefly discuss the implications of these cases.

b. What are the potential threats (refer to the Code) to compliance with the "Independence Rule" in these situations?

c. Do you believe E&Y as a firm has an overall lack of quality control with respect to independence? Explain.

Attachment:- Assignment.rar