1. You were engaged to file the 2018 individual and corporate tax returns for a client. The client provided her and other tax information on March 1, 2019, to help prepare the 2018 tax return. Your client paid you $12,000.00 in advance to prepare the returns. ON April 1, after repeated requests to return her records, you informed the client that her tax returns for 2018 would be completed by April 15, and all her records would be returned at that time. However, you failed to complete the return. The client paid another accountant $15,000.00 to complete the returns after the deadline and incurred a tax penalties. Do you believe that you violated the any of the rules of conduct in the AICPA Code? Did you violate the ethical standards beyond the Code? Explain.

2. You previously worked for the Department of Revenue, a governmental agency in your town. You cut all ties with the agency after you left two years ago to start your own tax accounting business. One day you receive a call from the agency asking you to conduct a tax audit of taxpayers in the town. You do not conduct a financial statement audit of any of these clients. Assume the proposed arrangement is to pay you 25 percent of additional amounts collected following your audits of property tax returns plus 50 percent of all first-year tax penalties. What ethical issues exist for you in deciding whether to accept the engagement? Would you accept it? Explain.

3. What is the problem with an auditor over relying on managements representations on the financial statements?