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2. Required: Each of the following situations involves a possible violation of the AICPA s Code of Professional Conduct, Rule 101- Independence. The audits are for public companies. Indicate whether each situation violates Independence. Explain why or why not- (a) Dip-It Paint Corporation requires an audit for the current year. However, Dip-It has not paid Allen & Allen the fees due for tax-related services performed two years ago. Dip-It issued Allen & Allen a note for the unpaid fees, and Allen & Allen proceeded with the audit services. (b) Steve Rackwill, CPA, has been asked by his audit client, Petry Plumbing Supply, to help implement a new system of internal controls. Rackwill will arrange interviews for Petry s hiring of new personnel and instruct and oversee the training of current client personnel. Petry will make all hiring decisions and supervise employees once they are trained. ) Kraemeer & Kraemeer recently won the audit of Garvin Clothiers, a large manufacturer of women's clothing. Jock Kraemeer had a substantial investment in Garvin prior to bidding on the engagement. In anticipation of winning the engagement, Kraemeer placed his shares of Garvin stock in a blind trust. (d) Zeker & Associates audits a condominium association in which the parents of a member of the firm own a unit and reside. The unit is material to the parents' net worth, and the member participates in the audit engagement (e) Jimmy Saad, a sole practitioner, audited Dallas Conduit, Inci s financial statements for the year ended June 30, and was issued stock by the client as payment of the audit fee (after the audit opinion was issued). Saad disposed of the stock before commencing fieldwork planning for the audit of the next year's June 30 financial statements. (1) A partner assigned to a firm's New York office is married to the president of a client for which the firm's Connecticut office performs audit services. The partner does not perform services out of or for the Connecticut office, cannot exercise significant influence over the engagement, and has no involvement with the engagement such as consulting on accounting or auditing issues. (9) A CPA's father acquired a 10% interest in his son's audit client. The investment is material to the father's net worth. The son is aware of his father's investment and the CPA participates in the audit engagement. (h) Adrian Reynolds now works as a junior member, staff accountant of the accounting team at Swiss Precision Tooling, a publicly traded manufacturing company. Three months ago, he worked as a staff auditor for Crowther & Sutherland, a local accounting firm, where he worked on the Swiss Precision Tooling audit team. Crowther & Sutherland is still the auditor for Swiss Precision Tooling. () Susana Millar is an audit manager for Bircham, Dyson, & Bell who audits Unigate Dairies. For her birthday, Susana' s 13 year-old daughter received a small (immaterial amount of stock in the Creamery Factory along with small shares in many other companies, she intends to keep the stocks until she goes to college. Creamery is a large subsidiary of Unigate Dairies. O Heath & Associates, CPAs, is the auditor of Halifax Investments, Inc., a public company. Heath makes most of its money by selling nonaudit services to its audit clients, but it ensures every service it provides for Halifax is in accordance with SEC and PCAOB rules and is preapproved by the company's audit committee. Last year, Heath billed the following to Halifax: audit fees $2 million, tax fees $2.3 million, and other fees $5.2 million. No services prohibited by the SEC/PCAOB were provided by Heath to Halifax, and the fee figures are appropriately disclosed in Halifax' s financial statements