Wally Wide is the partner on the audit engagement for First National Bank for its fiscal year-end of January 31, 2013. Wally was recently promoted to partner. Based on his increase in income, Wally and his family bought a large home and a new car. First National Bank had the most competitive mortgage rate and auto loan rates, so Wally obtained both his mortgage loan and car loan from First National. Wally paid 20 percent down on the house, received no special rate of interest, and the First National Bank holds the title to the house. Wally traded in his old car and made an additional down payment on the car and financed 60 percent of the price of the car with the bank. Again, Wally paid the prevailing interest rate and the bank holds the title to the car.
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This situation involves possible violations of the AICPA’s Code of Professional Conduct. State the rule in question and explain why or why not there is a violation of the code. You need not refer to the rule number but should clearly describe the rule in question.
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