In each of the following cases, indicate whether there is a violation of the rule on independence of the AICPA Code of Professional Conduct. Support your answer.

a. A CPA is a director of a charitable organization that serves some audit clients. Part of the directors' responsibilities is to decide who will receive benefits from the charitable organization.

b. A CPA obtained a personal loan from an audit client that represented approximately five percent of her wealth. The amount of collateral and the repayment terms were normal for loans of that type. - 40

c. A CPA recommends controller position descriptions for audit clients, including screening and recommending candidates to the client. All the clients have indicated that they will follow these recommendations. All CPA recommendations have been followed.

d. During an audit, the client indicates an intent to start litigation against the CPA for defi- ciencies in the prior year's work. The auditor decides to finish the current year's engage- ment.

e. A CPA audits the financial statements of Sell Company and Buy Company. During the audit, the CPA discovers that Sell Company engaged in price discrimination on products sold to Buy Company. The CPA does not reveal this information to the board of directors of Buy Company, but the CPA does ask the management of Sell Company to record a liability for possible price rebates to certain customers.

f. A CPA has an investment in a bank that has loaned money to an audit client. The invest- ment is about five percent of the CPA's wealth. g. A CPA is interested in serving the community. She asked the vice-president of her client to help her get an appointment to the board of directors of the United Fund. The CPA received the appointment and has devoted many hours to this activity. h. A CPA keeps books for his audit client and also decides where his client will invest surplus cash accumulated from time to time. i. The treasurer of a client pays for two of a CPA's lunches. Only the client's business was discussed at one lunch; no business was discussed at the other lunch.