The Following Situations Involve a Possible Violation of the AICPA's

question 66

Essay

The following situations involve a possible violation of the AICPA's Code of Professional Conduct. For each situation, (1) determine the applicable rule from the Code, (2) decide whether or not the Code has been violated, and (3) briefly explain how the situation violates (or does not violate) the Code.
A) In 20x4, Freeman and Johnson, both CPAs, decided to form a CPA practice. In 20x7, Freeman and Johnson approached Bill Delaney, a physician and medical expert, and asked him to assist them with their growing medical consulting practice. Delaney agreed, but only after he was given an ownership interest in the firm. Delaney does not intend to quit his private medical practice.
Rule: ________ Violation? Yes No

• A) In 20x4, Freeman and Johnson, both CPAs, decided to form a CPA practice. In 20x7, Freeman and Johnson approached Bill Delaney, a physician and medical expert, and asked him to assist them with their growing medical consulting practice. Delaney agreed, but only after he was given an ownership interest in the firm. Delaney does not intend to quit his private medical practice.
• Rule: ________ Violation? Yes No

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Definitions:

Fraud Visibility

The measure of how easily fraudulent activities or anomalies can be detected within a system or process.

Bookkeeping

The recording of financial transactions, and is part of the process of accounting in business, which involves maintaining accurate and systematic records of a company's financial transactions.

Checkbook Register

A document, often accompanying a checkbook, that allows individuals to track their deposits, withdrawals, and current balance for their bank account.

Single-entry System

A basic accounting method where entries are recorded only once, either as an expense or income, making it less intricate but less accurate than the double-entry system.