For Each of the Following Cases Indicate If the Action

question 45

Essay

For each of the following cases indicate if the action by a member CPA is a violation of the AICPA Code of Professional Conduct and cite the relevant rule.
A. Disclosed client information to another CPA firm during the discussion of a merger of the two firms.
B. Allow a company to change the way it values inventory to a method that is not GAAP because following GAAP would be misleading.
C. Had a new car loan from a bank that is a client when the bank holds the title to the car.
D. Based fee on approval of a bank loan dependent upon audited financial statements.
E. Did not comply with "Government Auditing Standards on a government audit."

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Definitions:

Machine Hours

A measure of the operating time of machinery used in production, commonly applied in calculating depreciation or allocating overhead.

Constrained Resource

Refers to the limited capacity or resources a company has which can restrict its ability to produce goods or services.

Profitable Use

The effective and efficient utilization of resources or assets to generate maximum profit.

Special Order Units

Items that are produced or ordered specifically for a particular customer, which may have different pricing or costing compared to regular orders.