Each of the following situations involves a possible violation of the AICPA Code of Professional Conduct….

Each of the following situations involves a possible violation
of the AICPA Code of Professional Conduct. For each situation,
state the applicable rule of conduct and whether it is a violation.
Emrich, CPA, provides tax services, management advisory services,
and bookkeeping services and also conducts audits for the same
nonpublic client. Because the firm is small, the same person often
provides all the services. Steve Custer, CPA, set up a casualty and
fire insurance agency to complement his auditing and tax services.
He does not use his own name on anything pertaining to the
insurance agency and has a highly competent manager, Jack Long, who
runs it. Custer often requests Long to review the adequacy of a
client’s insurance with management if it seems underinsured. He
believes that he provides a valuable service to clients by
informing them when they are underinsured. Seven small Seattle CPA
firms have become involved in an information project by taking part
in an interfirm working paper review program. Under the program,
each firm designates two partners to review the audit files,
including the tax returns and the financial statements, of another
CPA firm taking part in the program. At the end of each review, the
auditors who prepared the working papers and the reviewers have a
conference to discuss the strengths and weaknesses of the audit.
They do not obtain authorization from the audit client before the
review takes place. Franz Marteens is a CPA, but not a partner,
with three years of professional experience with Roberts and
Batchelor, CPAs. He owns 25 shares of stock in an audit client of
the firm, but he does not take part in the audit of the client, and
the amount of stock is not material in relation to his total
wealth.