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tional financial accounting standards: however, the standards he uses are not those CO- g. Providing proval of the audit committee the AICPA Code of Professional

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tional financial accounting standards: however, the standards he uses are not those CO- g. Providing proval of the audit committee the AICPA Code of Professional Conduct. For each situation, state the applicable rule of duct and whether it is a violation. small, the same person often provides all the services. 4-23 (OBJECTIVES 4-5, 4-7) Each of the following situations involves a possible violation of a. Stefan, CPA, provides tax services, management advisory services, and bookkeeping services and also conducts audits for the same nonpublic client. Because the firm is b. Roberta Marteens is a CPA, but not a partner, with three years of professional experi- of the firm, but she does not take part in the audit of the client, and the amount of ence with Johnson and Batchelor, CPAs. She owns 25 shares of stock in an audit cliene c. A nonaudit client requests assistance of Taylor Bordeaux, CPA, in the installation of a local area network. Bordeaux has no experience in this type of work and no knowl . edge of the client's computer system, so she obtains assistance from a computer consultant. The consultant is not in the practice of public accounting, but Bordeaux is confident of her professional skills. Because of the highly technical nature of the work, Bordeaux is not able to review the consultant's work. d. In preparing the personal tax returns for a client, Sarah Milsaps, CPA, observed that the deductions for contributions and interest were unusually large. When she asked the client for backup information to support the deductions, she was told, "Ask me no questions , and I will tell you no lies." Milsaps completed the return on the basis of the information acquired from the client. e. Silvia Panster, CPA, set up a casualty and fire insurance agency to complement her auditing and tax services. She does not use her own name on anything pertaining to the insurance agency and has a highly competent manager, Meg Emrich, who runs it. Panster often requests Emrich to review the adequacy of a client's insurance with management if it seems underinsured. She believes that she provides a valuable ser- vice to clients by informing them when they are underinsured. f. Seven small Austin, Texas, CPA firms have become involved in an information proj- ect by taking part in an interfirm working paper review program. Under the pro- gram, each firm designates two partners to review the audit files, including the tax returns and the financial statements, of another CPA firm taking part in the pro gram. At the end of each review, the auditors who prepared the working papers and the reviewers have a conference to discuss the strengths and weaknesses of the audit. They do not obtain authorization from the audit client before the review takes place 8. Francisco Hernandez, CPA, serves as controller of a U.S.-based company that has a significant portion of its operations in several South American countries. Certain statements based on international standards. Francisco oversees the issuance of the company's financial statements and asserts that the statements are based on interna issued by the International Accounting Standards Board. THE AUDITING PROFESSION

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