4-22 (Objectives 4-5, 4-7) Each of the following situations involves possible violations of the AICPA Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases in which it is a violation, explain the nature of the violation and the rationale for the existing rule.

1. The audit firm of Miller and Yancy, CPAs, has joined an association of other CPA firms across the country to enhance the types of professional services the firm can provide. Miller and Yancy share resources with other firms in the association, includ- ing audit methodologies, audit manuals, and common IT systems for billing and time reporting. One of the partners in Miller and Yancy has a direct financial interest in the audit client of another firm in the association.

2. Connor Bradley is the partner in charge of the audit of Southern Pinnacle Bank. Bradley is in the process of purchasing a beach condo and has obtained mortgage financing from Southern Pinnacle.

3. Jennifer Crowes audit client has a material investment in Polex, Inc. Crowes nonde- pendent parents also own shares in Polex, and Polex is not an attest client of Crowes firm. The amount of her parents ownership in Polex is not significant to Crowes net worth.

4. Joe Stokely is a former partner in Bass and Sims, CPAs. Recently, he left the firm to become the chief operating officer of Lacy Foods, Inc., which is an audit cli- ent of Bass and Sims. In his new role, Stokely has no responsibilities for finan- cial reporting. Bass and Sims made significant changes to the audit plan for the upcoming audit.

5. Odonnel Incorporated has struggled financially and has been unable to pay the audit fee to its auditor, Seale and Seale, CPAs, for the 2014 and 2015 audits. Seale and Seale is currently planning the 2016 audit.