For each of the following completely independent situations, describe the

For each of the following completely independent situations, describe the rules of professional conduct that are relevant. Have they been violated? Support your conclusion.

Situation A
Randi Woode, PA, was working on the year-end audit of her client, Pads N’ Pens (PNP). PNP is an office stationery retailer with a July 31 year-end. She was having difficulty completing the audit because some accounting records for the months of April and May had been destroyed in a fire. She told the owner-manager of PNP, Joe Smith, that she might have to qualify her audit report because of her inability to substantiate some of the balances on the financial statements. Joe pointed out that he had been her client for eight years and that she knew him to be honest and trustworthy. He also said a qualified report would harm his negotiations with the bank for additional loans. After considering PNP’s need for additional financing, as well as their long standing relationship, Randi agreed to issue an unqualified report.

Situation B
Lori Wilkes is an audit senior with a large PA firm in Toronto. She has learned that one of her largest clients, Superior Motors Ltd. (SML), is planning to acquire Steelco Inc. SML is Canada’s largest automobile manufacturer, and Steelco is one of SML’s biggest steel suppliers. Lori is confident that SML’s acquisition of Steelco will reduce SML’s costs dramatically, and that, as a result, SML’s share price will rise. She has, therefore, encouraged her boyfriend, Tom, to buy some shares while being careful not to divulge the real reasons behind her recommendation.

Situation C
After obtaining his PA designation, Larry Wilde decided to set up his own public accounting practice. He reasoned that naming his practice “Quality Chartered Accountancy Services” would best attract new clients.

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