Knowledge of the rules of conduct and related interpretations on independence, integrity, and objectivity will help you respond to the following cases.
For each case, state whether or not the action or situation shows violation of the rules of professional conduct, explain why, and cite the relevant rule or interpretation.
a . R. Stout, PA, performs the audit of the local symphony society. Because of her good work, she was elected an honorary member of the board of directors.
b . N. Wolfe, a retired partner of your PA firm, has just been appointed to the board of directors of Palmer Corporation, your firm's client. Wolfe is also an ex officio member of your firm's income tax advisory committee, which meets monthly to discuss income tax problems of the partnership's clients, some of which are competitors of Palmer Corporation. The partnership pays Wolfe $100 for each committee meeting attended and a monthly retirement benefit, fixed by a retirement plan policy, of $1000.
c. Archie Goodwin, PA, performs significant day-to-day bookkeeping services for Harper Corporation and supervises the work of the one part-time bookkeeper employed by Marvin Harper. This year, Marvin wants to engage PA Goodwin to perform an audit.
d. PA Fritz's wife owns 20% of the common shares of Botacel Company, which wants Fritz to perform the audit for the calendar year ended December 31, 20X4.
e. Fritz's wife gave her shares to their 10-year-old daughter on July 1, 20X4.
f. Fritz's daughter, acting through an appropriate custodian, sold the shares to her grandfather on August 1, 2007. His purchase, as an accommodation, took one-half of his retirement savings. g. Fritz's father managed to sell the shares on August 15 to his brother, who lives in Brazil. The brother fled there 20 years ago and has not returned.
h. Clyde Brenner is a manager in the Regina office of a large national PA firm. His wife, Bonnie, is assistant controller in ATC Corporation, a client of the firm whose audit is performed by the New York office. Bonnie and Clyde live in Rhode Island and commute to their respective workplaces.
i. Clyde Brenner just received word that he has been admitted to the partnership.
j. The Rockhard Trust Company, a client of your firm, privately told your local managing partner that a block of funds would be set aside for home loans for qualified new employees.
Rockhard's president is well aware that your firm experiences some difficulty hiring good people in the midsize but growing community and is willing to do what he can to help while mortgage money is so tight. Several new assistant accountants obtained home loans under this arrangement.