Question
Please help me just indicate what code is is 1) The applicable section of the rules of conduct (1 point) 2) Whether it is a
Please help me just indicate what code is is
1) The applicable section of the rules of conduct (1 point)
2) Whether it is a violation (1 point)
3) Explain the rationale for the existing rule (1 point)
A. Mitchell is a CPA, but not a partner, with four years of professional experience with Jazz, CPA's. He
owns 24 shares of stock in an audit client of the firm, but he does not take part in the audit of the
client, and the amount of stock is not material in relation to his total net worth.
B.
James is an audit partner at a CPA firm in Los Angeles, California. Irving used to work with James, but
has since left the CPA firm and opened a consulting firm. Irving's firm assists clients with financial
statement preparation and internal controls testing. James doesn't have many friends, but still
maintains his friendship with Irving and will regularly refer his audit and review clients to him if his
clients are in need of accounting consultation services. In return, Irving gives James a small
commission and NBA courtside tickets every year, which James loves because he would otherwise
never be able to attend.
C.
Curry, CPA, stayed longer than he should have at the annual holiday party of GSW, CPAs. On his way
home he drove through a red light and was stopped by a police officer, who observed that he was
intoxicated. In a jury trial, Curry was found guilty of driving under the influence. Because this was his
third offense, he was sentenced to 90 days in jail and his driver's license was revoked for 6 months.
D. Rubio is an audit partner at a CPA firm which is currently engaged to audit Zions Bank. His wife has
an automobile loan with Zions Bank that she obtained through normal lending procedures. The loan
is carried at a 3.9% interest rate, which is the rate the bank offers to all members with good credit.
The loan is collateralized by the car.
E.
Nene is an audit partner at a CPA firm and one of his clients, the Brazilia Bank, has struggled
financially and has not yet been able to pay Nene's firm for the 12/31/2016 or 12/31/2017 audits.
Nene agrees to perform the 12/31/2018 audit and allow Brazilia to pay for all audits in 2019.
F.
Hayward was an audit senior manager at the prestigious CPA firm of Butler, LLC. Hayward recently
left the CPA firm to become the chief financial officer of Celtics, Inc., which is a public company and
an audit client of Butler. In his new role, Hayward has responsibility for financial reporting.
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