Due to the death of its CFO, an audit client had its external auditor, Jon Snow,...
Due to the death of its CFO, an audit client had its external auditor, Jon Snow, CPA, perform the CFO’s job for two months until a replacement was hired.
Knowing the AICPA Code of Professional Conduct, answer the following:
- Indicate which principle or rule would be violated, or if none would be violated.
- State why the rule would be violated.
- Explain if there is a way to avoid breaking the rule by doing something different in these examples.
Homework Answers
Explanation:
1.
The appointment of External auditor, as CFO of the organisation,
till the time replacement is found for the doed CFO violates the
rule 101 of independence of AICPA code of professional conduct.
2.
As per rule 101- independence, the auditor of an organisation
during the period of professional engagement cannot act as an
employee, director or partner, member of management of the company,
associate, holding company or associate of holding company.
Therefore, in the given situation where the Jon snow has been appointed as CPA for the time being they find replacement, the rule of 101 is violated as independence of external auditor is violated by appointing him as CFO, while he is in professional engagement.
3.
To avoid the breaking of rule,
AND the organisation also wants to appoint only CPA their CFO till
tje time they find replacement.
Then they must higher CPA who is not in association, partnership,
or in employment with the auditor of their firm.
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