Question
Use the first step, identify any potential threats of the AICPA Conceptual Framework for Compliance with rules under the AICPA of Professional Conduct to analyze
Use the first step, "identify any potential threats" of the AICPA Conceptual Framework for Compliance with rules under the AICPA of Professional Conduct to analyze whether or not the accountants (Jerry Wallace and John Farbo) involved in the University Place situation violated the Objectivity and Independence rule.
Identifying threats. Members often face risks of encountering relationships or circumstances that could compromise compliance with the rules (in other words, "threats") in their duties or work environments.
The guide provides six threat categories to help members identify and develop sensitivity to potential threats:
Self-review threat. The threat that a member will not appropriately evaluate the results of prior services performed by the member himself or herself, or by an individual in the member's firm or employing organization.
Advocacy threat. The threat that a member will promote a client or employer's position to the point that his or her objectivity is compromised.
Adverse interest threat. The threat that a member will not be objective because his or her interests are in opposition to those of a client or employer.
Familiarity threat. The threat that because of a long or close relationship with a client or employer, a member will become too sympathetic to their interests or too accepting of their work.
Undue influence threat. The threat that a member will subordinate his or her judgment to that of an individual associated with a client, employer or other relevant third party because of the individual's (1) reputation or expertise, (2) aggressive or dominant personality, or (3) attempts to coerce or exercise excessive influence over the member.
Self-interest threat. The threat that a member will act in a manner that is adverse to the interests of his or her firm, employer, client or the public, as a result of the member or his or her close family member's financial interest in or other relationship with a client or the employer.
Required: Identify the threat(s) to Objectivity and Independence that are relevant to the following accountants and discuss why they are relevant:
(1) Jerry Wallace, UI VP of Finance and Administration and UI Foundation Treasurer
(2)John Farbo, UI Director of Internal Audit
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