Professional Standards Case Please use the AICPA Professional Standards to answer each of the following questions. Please cite the section of the professional standards where you found your answer. You may not cite other sources ca text book or other on-line sources. This must be completed on an individual thesis and will be worth 25 points points per question below) Please type your solutions and upload the completed it to L in the appropriate dropbox 1. Perry Corp. is changing accounting firms because management believes that its previous firm botched the preparation of Perry Corp's corporate tax return. They are in your firm because they heard great things about your firm's tax department. Your firm will not be auditing or reviewing the financial statements of Perry Corp. Instead, your firm will only do tan preparation and consulting work for Perry, Perry asked you to file amended tax returns for the last three years to claim refunds for overpayments due the erroneous returns prepared by the prior accounting form. To provide an incentive for you to look for every available deduction, Perry said that they will pay you 20% of the refunds received. Given that you will not be doing an auditor review, are you allowed to accept this engagement under these terms? (Refer to the Code of Professional Conduct, and assume you are a member of the AICPA) 2. You were assigned to be the audit senior for the audit of Oklahoma Petro, Inc. (OP, a private company that owns numerous oil and gas wells in Oklahoma This is the first year your firm is auditing OP, and your firm hired an independent geologist as an expert to provide assistance in evaluating some of the geological data provided by the client. At the conclusion of the audit your firm has decided that an unmodified opinion on the financial statements is appropriate. However, since the geologist assisted in evaluating the evidence, you are wondering if you should refer to the work of the geologist to share responsibility with him. The manager on the engagement asked you to research the issue. Is it appropriate to mention the work of the geologist in the unmodified report? Use the clarified auditing standards). You were recently reading an article about auditing entities that use a service organization in the Journal of Accountancy, and you came upon the term "Complementary user entity controls. You had not seen this term before, and you wanted to learn more about it. What does this term mean? (Use the clarified auditing standards to find your answer.) 4. You were assigned to be the audit senior for the audit of Happy Hippy CBD, Inc. (HHC), a private company, HHC has been a client of your firm for the past two years, and during the current year they implemented a new, mandatory accounting standard for leases issued by the FASB. You realize that you are required to add an emphasis of matter paragraph when a client voluntarily changes from one generally accepted accounting principle to another generally accepted principle. However, you are not sure whether you are required to add an emphasis of matter paragraph in this situation since the change was mandated by the FASB. Assuming this change has a material effect on the financial statements, should the firm add an emphasis of matter paragraph to the audit report related to the matter? Use the clarified auditing standards to find your answer.) 5. You have been hired by Smith Distributing to perform a review of its annual financial statements because they are seeking a line of credit with First State Bank As you perform your procedures, you discover unusual fluctuations in the revenue account so you started to investigate further. You believe that the evidence you obtained is indicative of fraud. What should you do? Use the Accounting and Review Standards (AR-C) to answer this question)
