For Each Situation (1-5),identify the Most Applicable AICPA Rule of Conduct

question 16

Short Answer

For each situation (1-5),identify the most applicable AICPA rule of conduct and whether there is a violation or no violation of the rule (A-F).One or more letters may not be used.
A. Rule 101: Independence; no violation
B. Rule 101: Independence; violation
C. Rule 301: Confidential Client Information; no violation
D. Rule 301: Confidential Client Information; violation
E. Rule 503: Commissions and Referrals; no violation
F. Rule 503: Commissions and Referrals; violation
___ 1. Brandon Frisby, CPA, found out that his client, Uptonogood, Inc., had failed to properly account for several leases. Frisby informed Uptonogood's management that he must issue a qualified audit report and disclose the lease problem in the report. Uptonogood's management indicated that such a disclosure would constitute a disclosure of confidential information. Nevertheless, Frisby rendered the qualified audit report, including an explanatory paragraph about the inadequate lease accounting.
___ 2. Priscilla Hudson, CPA, a partner in Hudson and Danhoffer, CPAs, holds the position of honorary director for the Friends of the Symphony Orchestra, a firm audit client.
___ 3. The wife of Gerald Skoch, CPA, is the controller of Fine Corporation. Skoch is an audit partner for Barnes and Bucknell, CPAs, in their Long Island office. The Long Island office of Barnes and Bucknell audits Fine Corporation, but Skoch is not part of the audit team and provides no other services to Fine Corporation.
___ 4. Johnny Beacon, CPA, is the auditor of Novak Wholesale, Inc. Beacon received a 10% commission from Computer Systems, Inc. for hardware sold to Novak Wholesale, Inc. The sale was made based on Beacon's recommendation to Novak Wholesale that the company needed a new accounting information system. Beacon disclosed the commission to Novak's management. Beacon also performs an annual audit for Novak.
___ 5. Cecilia Hart, CPA, provides tax services to Myers Company. Hart received a 10% commission from Computer Systems, Inc. for hardware sold to Myers Company. The sale was made based on Hart's recommendation to Myers Company that the company needed a new accounting information system. Hart disclosed the commission to Myers' management.

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Definitions:

Tax Bracket

A range of income taxed at a specific rate by the government, part of a progressive tax system.

Corporate Bond

A debt security issued by a corporation and sold to investors, paying fixed interest over its lifetime and repaying the principal at the bond’s maturity date.

Tax-Exempt

Financial earnings or transactions that are free from taxation.

Tax Bracket

The range of incomes taxed at particular rates, which increases progressively with higher earnings.