For each situation (1-5), identify the most applicable AICPA rule of conduct and indicate whether there is a violation or no violation of the rule (A-F). One or more letters may not be used.
A. Rule 101: Independence; no violation
B. Rule 101: Independence; violation
C. Rule 102: Integrity and Objectivity; no violation
D. Rule 102: Integrity and Objectivity; violation
E. Rule 203: Accounting Principles; no violation
F. Rule 203: Accounting Principles; violation
____ 1. Sterling Stevens, CPA, was auditing Global Services Company. Global Services used an accounting principle that was not in conformity with GAAP. Nevertheless, Stevens rendered a standard unqualified audit report.
____ 2. Christina Hall, CPA, provided expert testimony for a plaintiff. The defendant in the case was a client of Hall’s.
____ 3. Sam Miller, CPA, owned 100 shares of Johnson Drilling, Inc., his audit client.
____ 4. Dewey Wise, CPA, obtained a loan from an insurance company using the cash value of the insurance policy as collateral. The loan is for less money than the cash value of the policy.
____ 5. Stella Steinbeck, CPA, was auditing Good Services Company, which used an accounting principle that was not in conformity with GAAP. Good Services believed and Steinbeck concurred that using a generally accepted method would cause the financial statements to be misleading. Therefore, Steinbeck rendered a standard unqualified audit report.
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