Each of these are real-life situations involving possible AICPA Code violations. For each one, state three things: 1. what rule is applied to the situation; 2. whether it is a violation of the Code or not and if so 3. explain the nature of the violation.

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

10. Rachel Anderson, CPA, stayed longer that she should have at an annual holiday party of Anderson and Associates, CPAs. On her way home she drove through a red light and was stopped by a police officer, who observed that she was intoxicated. In a jury trial, Anderson was found guilty of driving under the influence of alcohol. Because this was not her first offense, she was sentenced to 30 days in jail and her drivers license was revoked for one year.

11. Rick Henderson, CPA, serves as controller of a U.S. based company that has a significant portion of its operations in several South American countries. Certain government provisions in selected countries require the company to file financial statements based on international standards. Rick oversees the issuance of the companys financial statements and asserts that the statements are based on international financial accounting standards; however, the standards he uses are not those issued by the IASB.

12. In preparing the personal tax returns for a client, Steve Motive, CPA, observed that the deductions for contributions and interest were unusually large. When he asked the client for backup information to support the deductions, he was told, Ask me no questions, and I will tell you no lies. Motive completed the return on the basis of the information acquired from the client.