Representation of Facts: Warren James practices as a CPA in the southern California area. His firm employs two other CPAs, three uncertified staff members, and some clerical staff. His practice includes accounting, compilation and reviews, and tax and advisory services. In recent years, his practice has gravitated heavily towards advisory and consulting services. Currently, about half of Warrens business revenues come from consulting services and he has built up quite a reputation in that area of his practice.

A client, George Harper, has approached Warren, requesting some advice. The client owns a piece of land in the middle of a very desirable area in downtown Los Angeles. George desires to build an office building on this land. He owns the title to the land free and clear but does not have any cash. He has solicited and received several proposals from contractors who will build an office building on the land at their own expense in exchange for some ownership interest in the completed building and the land. The proposals all have different terms, as far as the size of the structure, the allocation of the cost of materials between the parties, and the terms of the partnership as to the ownership of the completed property. George has asked Warren to do some economic modeling and forecasting and cash flow analysis, and to advise him as to which alternative makes the most economic sense.

As Warren starts reviewing the proposals provided by contractors, it strikes him that one of them is from his own brother, Allen James, who is a prominent contractor in California. Warren is happy to see his brothers name as one of the bidders. This is a very lucrative business proposition for any contractor in fact, it is a once-in-a-lifetime chance. Allen is very close to his brother. He also holds him in very high regard. He really hopes that he can recommend his brother to George as the best alternative. Over the next week or two, Warren examines the proposals more closely and runs some numbers. It does in fact appear to him that the proposal offered by his brother may be the best one. Although he needs to finalize and document his analysis, he is leaning toward recommending his brothers bid to George as the best proposal.

Requirements:

Please write a memo discussing the ethical issues Warren faces in making this decision, as a member of the AICPA, using the Ethical Decision Making (EDM) model. Specifically, in your memo discuss relevant facts, the stakeholders, the various rules of the AICPA Code of Professional Conduct (the code) that must be considered, the risks for violating those rules in this situation (ethical issues), the various possible alternatives and the effect of each alternative on the various stakeholders, evaluation of the alternatives and the correct course of action to be taken. When referring to the various rules, please cite the specific section of the code you are relying on.

There is no minimum or maximum length to your memo. It should be of sufficient length to discuss all relevant points and issues but not too wordy, redundant, or excessively detailed. A good rule of thumb is that a three to four-page memo should be sufficient to provide an adequate discussion.