Question

.Providing bookkeeping services to an audit client 5-18 (Objectives 5-5, 5-6) Each of the following situations involves a possible violation of the IESBA's Code of Ethics, For each situation, state the fundamental principle related the situation and whether it is a violation. a. Fadl Shaker is a CPA, but not a partner, with three years of professional experience with Shaker & Shaker, CPAS. He owns 25 shares of stock in an audit client of the firm, but he does not take part in the audit of the client, and the amount of stock is not material in relation to his total wealth. b. A non-audit client requests assistance of Medhat Fahmy, CPA, in the installation of a local area network. Medhat had no experience in this type of work and no knowledge of the client's computer system, so he obtained assistance from a computer consultant The consultant is not in the practice of public accounting, but Medhat is confident of his professional skills. Because of the highly technical nature of the work, Medhat is not able to review the consultant's work c. In preparing the personal tax returns for a client, Samir Wakeel, CPA, observed that the deductions for contributions and interest were unusually large. When he asked

Answer 1

Fundamental principles related to the situation 1) Objectivity 2) Professional competence and due care 3) Professional behavior 4) Professional competence and due care 5) Integrity 6) Confidentiality 7) Objectivity Whether there is a violation or not 1) No violation as Fadl Shaker is not a partner in the auditing firm of Shaker & Shaker and also not involved in the audit of client where he owns 25 shares of stock 2) Violation is there because professional competence and due care has not been exercised by Medhat Fahmy due to non-review of the work of the consultant. 3) Violation because Samir Wakeel did not act in compliance with relevant lavws and regulations by blindly relying on the information acquired from the client and not asking any relevant and necessary questions. 4) Violation because Sally Moftah did not perform her duty of maintaining professional knowledge and skill at the level which is required to make sure that the client receives competent professional services based on current legislations, developments in practice. 5) Violation because the licensed auditor was not straight-forward and honest in his professional and business relationship with her client by not using her own name on anything relating to the insurance agency.