The situations that follow pertain to Rule 101 of the AICPA Code of Professional Conduct as it relates to family relationships. Indicate whether each situation violates the Code and which provisions apply.
a. A staff accountant’s mother retired from her position as Controller for an audit client. Upon retirement, she was awarded shares of stock, which increased her ownership share to 5%. Her stock ownership is material to her net worth. The staff accountant participates as a member of this client company’s audit team.
b. A CPA manager is a member of the audit team of Hudson Motorworks, Inc. A cousin of the CPA’s wife is Hudson’s vice president and sales director. This cousin also owns a very small proportion (less than 1%) of the shares of the company’s stock.
c. A CPA manager has a sister who holds a 50% ownership interest in the CPA’s audit client. This investment is material to the sister’s net worth.
d. A partner was formerly a shareholder in a company, but upon receiving a request for proposal for the company’s current year audit engagement, the partner transferred all shares of stock to her daughter.
e. A CPA participates in the audit of a vacation resort complex. The CPA’s parents own a timeshare in this resort complex, which is material to their net worth.
f. A partner’s dependent parent has a minor 5% ownership interest in an audit client of the partner’s firm. The audit is conducted by other CPAs in the partner’s office, but the partner does not participate in this audit engagement
g. A CPA manager is married to the CEO of an audit client. The CPA is also a shareholder of this audit client company. The audit is performed by CPAs in the firm’s south side office. The CPA manager works in the firm’s north side office and therefore is unable to exercise any influence over the audit engagement.