Review the 8 unrelated situations below and identify the most applicable rule of conduct and determine if whether there is a violation or no violation. You will select one of the options A, B, C, etc.

A. Rule 101: Independence;noviolation B. Rule 101: Independence; violation

C. Rule 102: Integrity and Objectivity;noviolation D. Rule 102: Integrity and Objectivity; violation

E. Rule 203: Accounting Principles;noviolation F. Rule 203: Accounting Principles; violation

G. Rule 301: Confidential Client Information;noviolation H. Rule 301: Confidential Client Information; violation

I. Rule 302: Contingent Fees;noviolation J. Rule 302: Contingent Fees; violation

K. Rule 503: Commissions and Referrals;noviolation L. Rule 503: Commissions and Referrals; violation

1)Dean Millay, CPA, was auditing Zeo Company. Zeo used an accounting principle that was not in conformity with GAAP. Nevertheless, Millay rendered a standard unqualified audit report.

2)Leo Slain, CPA, owned 100 shares of Sodium, Inc., his audit client.

3)Lisa Wiley, CPA, was auditing Hall Company. Hall Company used an accounting principle that was not in conformity with GAAP. Hall Company believed, and Wiley concurred, that using a generally accepted method would cause the financial statements to be misleading. Therefore, Wiley rendered an unqualified audit report with explanatory language.

4)Pauli, CPA, and one of his audit clients are considering investing in a business together. Jackson would own 26% of the business and the client would own 51%. Pauli's investment in the business is material to his net worth.

5)Grof, CPA, is an owner in the firm Grof and Allen, CPAs. Grof's husband is on the board of directors of Talbot Corporation, an audit client of Grof and Allen. Grof does not participate on the audit engagement.

6)Katra, CPA, performs investment advisory services for an audit client and receives an annual fee based on a percentage of the value of the client's investment portfolio at the end of each year.

• Note for #6 - Although this is an independence issue (Rule 101), this is not the best answer for this particular question.

7)The wife of Ken Parry, CPA, is the controller of Sundem Corporation. Ken Parry is an audit partner for Franz & Targ, CPAs, in their San Francisco office. The San Francisco office of Franz & Targ audits Sundem Corporation, but Mr. Parry is not part of the audit team and provides no other services to Sundem Corporation.

8)Spencer Navar, CPA, is the auditor of Giant Donuts, Inc. Navar received a 10% commission from ERM Systems, Inc. for hardware sold to Giant Donuts, Inc. The sale was made based on Navar's recommendation to Giant Donuts that the company needed a new accounting information system. Navar disclosed the commission to Giant Donuts's management. Navar also performs an annual audit for Giant Donuts.