Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 4, Problem 24DQP
To determine
Describe the nature of the violation and the rationale for the existing rule for the situations given.
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Read the following cases.
Required:
For each case, select whether the action or situation shows a violation of the AICPA Code of Professional Conduct, and select the
relevant rule.
a. CPA Jerry Cheese became the new auditor for Python Insurance Company. Cheese knew a great deal about insurance
accounting but had never conducted an audit of an insurance company. Consequently, Cheese hired CPA Tate Gilliam, who
had six years of experience with the State Department of Insurance Audit. Gilliam managed the audit, and Cheese was the
partner in charge.
b. CPA Mackenzie Palin practices public accounting and is a director of Comedy Company. Palin's firm performs consulting and
tax services for Comedy. Palin prepared unaudited financial statements on Comedy's letterhead and submitted them to First
National Bank in support of a loan application. Palin's accounting firm received a fee for this service.
c. CPA Ellery Idle audited the financial statements of Monty Corporation and gave an unmodified…
General and Technical Rule Cases. Read the following cases. For each, state whether the action or situation shows a violation of the AICPA Code of Professional Conduct; if so, explain why and cite the relevant rule.a. CPA Jerry Cheese became the new auditor for Python Insurance Company. Cheese knew a great deal about insurance accounting but had never conducted an audit of an insurance company. Consequently, Cheese hired CPA Tate Gilliam, who had six years of experience with the State Department of Insurance Audit. Gilliam managed the audit, and Cheese was the partner in charge.
b. CPA Mackenzie Palin practices public accounting and is a director of Comedy Company. Palin’s firm performs consulting and tax services for Comedy. Palin prepared unaudited financial statements on Comedy’s letterhead and submitted them to First National Bank in support of a loan application. Palin’s accounting firm received a fee for this service.c. CPA Ellery Idle audited the financial statements of Monty…
For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct is violated. Assume allpersons listed in the situations are members of the AICPA. (Note: Refer to the AICPA Code ofProfessional Conduct contained on pages 25–27 in Chapter 1 for descriptions of the principles.)a. Reggie, the managing partner of an audit firm, has the authority to approve all transactions. As a result, he uses firm funds to purchase a new couch for his home.b. Taylor is a first-year auditor for a large public accounting firm. She is assigned to auditBike Global, a regional travel agency specializing in bike tours. Taylor does not discloseto her firm that her mother is a co-owner of Bike Global, since Taylor knows that shewill not allow herself to be influenced by her mom.c. Rick has been working for his company for ten years and is required to attend internal control training annually. Rick does not…
Chapter 4 Solutions
Auditing And Assurance Services
Ch. 4 - Prob. 1RQCh. 4 - Describe an ethical dilemma. How does a person...Ch. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18.1MCQCh. 4 - Prob. 18.2MCQCh. 4 - Prob. 18.3MCQCh. 4 - Prob. 19.1MCQCh. 4 - Prob. 19.2MCQCh. 4 - Prob. 19.3MCQCh. 4 - Prob. 20.1MCQCh. 4 - Prob. 20.2MCQCh. 4 - Prob. 20.3MCQCh. 4 - Prob. 21DQPCh. 4 - Prob. 22DQPCh. 4 - Prob. 23DQPCh. 4 - Prob. 24DQPCh. 4 - Prob. 25DQPCh. 4 - Prob. 26DQPCh. 4 - Prob. 27DQPCh. 4 - Prob. 28DQPCh. 4 - Prob. 30CCh. 4 - Prob. 31CCh. 4 - Prob. 32C
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