In the practice of public accounting an auditor is expected to comply with the Rules of Conduct set forth in the Code of Ethics. Listed below are circumstances that raise a question about an aud tor's ethical conduct:

1. The auditor has a bank loan with a bank that is an audit client.

2. An unqualified opinion is expressed when financial statements are prepared according to AICPA Accounting Research Bulletins without any attendant unusual circumstances.

3. An auditor retains client's records as a means of enforcing payment of an overdue audit fee.

4. A CPA vouches for the achievability of a forecast.

5. An auditor sells her shares of stock in a client company in April prior to beginning work on the audit for the year ending December 31 .

6. An auditor accepts an engagement knowing that he does not have the expertise to do the audit.

7. A CPA quotes a client a fee but also states that the actual fee will be contingent on the amount of work done.

8. A CPA firm states in a newspaper ad that it has had fewer lawsuits than its principal competitors.

9. A CPA resigns her position as secretary/treasurer of the client on May 1, prior to beginning audit for year ending December 31.

10. A CPA discloses confidential information about a client to a successor auditor.

Required:

a. Indicate for each circumstance whether the effect on the Rule of Conduct is (1) a violation, (2) not a violation, or (3) indeterminate.

b. Identify the rule that is at issue in each case and the reason(s) for your answer.