Raul, PA, received a call from his friend, Cristobal Franco. He needed an audit right away because the bank might call his loan for his computer store, CF Ltd. Since Cristobal had been his high school friend and they still played soccer together every two weeks, Raul agreed. Raul and Cristobal had a quick meeting, where Raul fixed the audit fee at $10 000. Cristobal stressed the importance of an unqualified opinion for the bank.

Raul sent two available junior staff to CF's offices. The junior staff were experienced in review engagements and had been working for Raul for about six months. They had a quick look around the store, noting documents strewn everywhere. The CF accounting staff came in and chatted briefly after their smoke break. They were about a month behind on recording transactions because Cristobal had laid off one salesperson. So the accounting staff also helped out with providing sales quotes, and Cristobal did all of the technical work.

At the end of the day, the junior staff were each given a $250 gift certificate to be used in the computer store. This was great because CF also sold MP3 players and supplies such as CDs and DVDs.

At dinner that night, the junior staff told their family that it would probably be a great idea to hold off on any computer supplies or equipment purchases that they needed, since CF would likely hold a sale in the next month or two to improve cash flow.

Requirement

Identify and discuss four violations of the rules of conduct with respect to CF Ltd. Number your answers.