QUESTION 3: (10 MARKS) Each of the following situations involves possible violations of the AICPA's Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases, provide your justification for the decision. a) M. Khalifa is the partner in charge of the audit of Southern Ajman Bank. Khalifa purchased a beach villa last year and obtained mortgage financing from Southern Ajman Bank b) Sara has been serving as the senior auditor on the audit of Bio-Tech Corporation. Because of her outstanding work, the head of internal audit at Bio-Tech Corporation extended her an offer of employment to join the internal audit department as an internal audit manager. When the discussions with Bio-Tech Corporation began, Sara informs the office's managing partner nevertheless she was not removed from the audit engagement. c) A non-audit client requests the assistance of Kamal and Co., CPA, in the installation of a local area network. Kamal had a great experience in this type of work and knowledge of the client's computer system but extremely occupied with other clients. So he obtained assistance from a computer consultant. The consultant is not in the practice of public accounting, but Kamal is confident in his professional skills. Although the nature of the work is highly technical, Kamal is able to adequately review the consultant's work. d) Emirates Solution, CPA, provides tax services, management advisory services, and bookkeeping services and conducts audits for the same public client. Because the firm is small, the same person often provides all the services. e) Seven small Ajman CPA firms have become involved in an information project by taking part in an inter-firm working paper review program. Under the program, each firm designates two partners to review the audit files, including the tax returns and the financial statements of another CPA firm taking part in the program. At the end of each review, the auditors who prepared the working papers, and the reviewers have a conference to discuss the strengths and weaknesses of the audit. However, they failed obtained authorization from the audit client before the review takes place. QUESTION 3: (10 MARKS) Each of the following situations involves possible violations of the AICPA's Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases, provide your justification for the decision. a) M. Khalifa is the partner in charge of the audit of Southern Ajman Bank. Khalifa purchased a beach villa last year and obtained mortgage financing from Southern Ajman Bank b) Sara has been serving as the senior auditor on the audit of Bio-Tech Corporation. Because of her outstanding work, the head of internal audit at Bio-Tech Corporation extended her an offer of employment to join the internal audit department as an internal audit manager. When the discussions with Bio-Tech Corporation began, Sara informs the office's managing partner nevertheless she was not removed from the audit engagement. c) A non-audit client requests the assistance of Kamal and Co., CPA, in the installation of a local area network. Kamal had a great experience in this type of work and knowledge of the client's computer system but extremely occupied with other clients. So he obtained assistance from a computer consultant. The consultant is not in the practice of public accounting, but Kamal is confident in his professional skills. Although the nature of the work is highly technical, Kamal is able to adequately review the consultant's work. d) Emirates Solution, CPA, provides tax services, management advisory services, and bookkeeping services and conducts audits for the same public client. Because the firm is small, the same person often provides all the services. e) Seven small Ajman CPA firms have become involved in an information project by taking part in an inter-firm working paper review program. Under the program, each firm designates two partners to review the audit files, including the tax returns and the financial statements of another CPA firm taking part in the program. At the end of each review, the auditors who prepared the working papers, and the reviewers have a conference to discuss the strengths and weaknesses of the audit. However, they failed obtained authorization from the audit client before the review takes place