The following are five independent situations. For each case, state whether or not the CPA or CPA student has violated the Code of Ethical Principles and Rules of Conduct and explain your reasoning (3 marks for each situation).

1. Jamie Taylor, CPA, has the Colco Corporation as an audit client. Colco asked Jamie to test controls of the payroll cycle this year as Jamie has taken a substantive approach to testing payroll in the past. The Colco Corporation implemented a new payroll system last year. Jamie agreed to test payroll system controls and as they were found to be operating effectively, Jamie relied on them as part of her testing of the payroll cycle. No material misstatements were found during payroll or any other account testing and Colco received an unqualified audit opinion.
2. Luke Tomlinson is the in-charge auditor on the audit engagement of Zorro Corporation, a public company. The chief financial officer of Zorro recently called Tomlinson to ask for some advice on the accounting treatment for some complex transactions in order for the CFO to complete the draft financial statements before the start of the financial statement audit. The CFO told Luke that since this is above the company's level of expertise, they will implement whatever Luke recommends. Luke provides the recommended accounting treatment to the CFO.
3. Bob Baker is partner on the audit engagement of Prudential Bank for its fiscal year-end of January 31. Bob was recently promoted to partner. Based on his significant increase in income, Bob and his family bought a larger home. Prudential Bank had the most competitive rate so Bob obtained his mortgage loan from Prudential. Bob paid 20% down and received no special rate of interest.
4. Shreya Nowlan, CPA, has been asked to share her working papers related to her audit last year of Better Mail Service (BMS). Shreya stated that while she will not send the electronic working papers to the new auditor, they can come by her office to review the files there. The new auditor of BMS agrees and spends two hours at her office reviewing Shreya's working papers. BMS was not notified about the discussion between their current and predecessor auditor
5. Faisal, CPA, is the auditor of an unlisted company. The company's controller has engaged Faisal to install an off-the-shelf accounting package, including entering the company's chart of accounts and selecting the configuration options appropriate for the company's business. Faisal will then train the client's employees on the operation and maintenance of the system.