Question: Independence, Integrity, and Objectivity Cases. Read the following cases.
Required: For each case, state whether the action or situation shows a violation of the AICPA Code of Professional Conduct, explain why if it does, and cite the relevant rule or interpretation.
a. CPA Ellen Stout performs the audit of the local symphony society. Because of her good work, she was elected an honorary member of the board of directors.
b. CPA Darcy Wolfe practices management consulting in the area of computerized information systems under the firm name of Wolfe & Associates. The "associates" are not CPAs and the firm is not an accounting firm. However, Wolfe shows "CPA" on business cards and uses these credentials when dealing with clients.
c. CPA Alex Goodwin performs significant day-to-day bookkeeping services for Harper Corporation and supervises the work of the one part-time bookkeeper employed by Hadley Harper. This year, Harper wants to engage CPA Goodwin to perform an audit.
d. CPA H. Poirot bought a home in 1989 and financed it with a mortgage loan from Farr away Savings and Loan. Farr away was merged into Nearby S&L, and Poirot became the manager in charge of the Nearby audit.
e. Poirot inherited a large sum of money from old Mr. Giraud in 2000. Poirot sold his house, paid off the loan to Nearby S&L, and purchased a much larger estate. Nearby S&L provided the financing.
f. Poirot and Mala Lemon (a local real estate broker) formed a partnership to develop apartment buildings. Lemon is a 20 percent owner and managing partner. Poirot and three partners in the accounting firm are limited partners. They own the remaining 80 percent of the partnership but have no voice in everyday management. Lemon obtained permanent real estate financing from Nearby S&L.
g. Lemon won the lottery and purchased part of the limited partners' interests. She now owns 90 percent of the partnership and remains general partner while the CPAs remain limited partners with 10 percent interest.
h. CPA Justin Shultz purchased a variable annuity insurance contract that offered the option to choose the companies in which this contract will invest. As directed, the insurance company purchased common stock in one of Shultz's audit clients.