Responsibilities to clients' cases. Read the following cases. For each case, state whether the action or situation shows a violation or potential for violation of the AICPA Code of Professional Conduct, explain why, and cite the relevant rule or interpretation.

A CPA who had reached retirement age arranged to sell the practice to another certified public accountant. Their agreement called for the review of all audit documentation and business correspondence by the accountant purchasing the practice.

Martha Jacoby, CPA, withdrew from the audit of Harvard Company after discovering irregularities in Harvards income tax returns. One week later, Jacoby received a phone call from Jake Henry, CPA, who explained that he had just been retained by Harvard Company to replace her. Henry asked Jacoby why she withdrew from the Harvard engagement, and she told him.

Burgess Company engaged Kim Philby, CPA, to audit Maclean Corporation in connection with a possible initial public offering (IPO) of stock registered with the Security and Exchange Commission (SEC). Burgess Company established a holding company named Cairncross Inc. and asked Philby to issue an engagement letter addressed to Cairncross stating that Cairncross would receive the auditors report. Caricross has no assets and Philby agreed to charge a fee for the audit of Maclean only if the IPO is successful.