25-27 (OBJECTIVES 25-5, 25-7) The following are situations that may violate the AICPA Code of Professional Conduct. Assume, in each case, that the CPA is a partner, unless stated otherwise. 1. Elbert is a staff accountant at a CPA firm. Elbert's wife works in human resources at one of the clients audited by Elbert's firm, although Elbert is not on the audit engage- ment. As part of an employee stock ownership program at her company, Elbert's wife receives shares of stock in her company. 2. Contel, CPA, advertises in the local paper that his firm does the audit of 14 of the 36 largest community banks in the state. The advertisement also states that the average audit fee, as a percentage of total assets for the banks he audits, is lower than any other CPA firm's in the state. 3. Baker, CPA, approaches a new audit client and tells the president that he has an idea that could result in a substantial tax refund in the prior year's tax return by appli- cation of a technical provision in the tax law that the client had overlooked. Baker adds that the fee will be 50 percent of the tax refund after it has been resolved by the Internal Revenue Service. The client agrees to the proposal.