Tom Jencks, CPA, conducts a public accounting practice. In 1999, Jencks and Raymond Curtis, a non-CPA, organized Electro-Data Corporation to specialize in computerized bookkeeping services. Jencks and Curtis each supplied 50 percent of Electro-Data's capital, and each holds 50 percent of the capital stock. Curtis is the salaried general manager of Electro-Data. Jencks is affiliated with the corporation only as a stockholder;

he receives no salary and does not participate in day-to-day management. However, he has transferred all of his bookkeeping accounts to the corporation and recommends its services whenever possible.

Required: 

Organizing your presentation around Jencks' involvement with Electro-

Data Corporation, discuss the propriety of 1. A CPA's participation in an enterprise offering computerized bookkeeping services.

2. A CPA's transfer of bookkeeping accounts to a service company.

3. A CPA's recommendation of a particular bookkeeping service company.