Each of the Following Situations Involves a Possible Violation of the Rule

question 142

Essay

Each of the following situations involves a possible violation of the rule on independence. For each situation, (1) decide whether the Code of Professional Conduct has been violated, and (2) briefly explain how the situation violates (or does not violate) the Code of Professional Conduct.
a. Harry Brown is a partner in the Topeka office of Hedley & Co., CPAs. Harry's brother is employed in an audit-sensitive position by Jensen Appliances, a publicly held company in Kansas. Jensen Appliances is one of Hedley & Co.'s audit clients. Neither Harry nor personnel from the Topeka office is involved in the audit of Jensen.
Violation?
Yes No

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Definitions:

Cash Payments

Payments of cash to fulfill debts or acquire goods and services.

T Accounts

A visual representation of a ledger account that separates debits and credits, making the accounting process simpler.

Debit

An accounting entry that either increases an asset or expense account, or decreases a liability or equity account.

Credit

An accounting entry that may either decrease assets or expenses or increase liabilities, equity, and income, recorded on the right side of an accounting ledger.