For the following scenarios, explain the violation(s) to the Rules of Professional Conduct:

1. Bill Randall, CPA, began a telephone campaign to grow his client base. He began calling companies listed in the telephone directly within a twenty mile radius advising them of his accounting services. After making several phone calls, Bill finally landed a new audit client, Big Bob’s Auto Sales and Leasing Ltd. In order to secure this new business, Bill entered into an agreement with Big Bob whereby Bill would receive a flat fee every time he referred one of his clients to Big Bob’s. He would also earn a 1% percent commission on any vehicle sale or lease that resulted from the referral. As their business relationship grew overtime, Bill asked Big Bob for a loan claiming he wanted to expand his accounting practice. He in fact took the funds for his own personal use without advising his client.

2. Anand Lee, CPA, was the CFO of ABC Incorporated. In his role as CFO, he became aware of a material error in the company’s inventory for the annual financial statements in the amount of approximately $1.5 million. Anand brought the matters to the attention of senior management, who casually indicated that year end was already completed and thus they did not want to harm investor confidence by reissuing the financial statements, but Anand did not seek assistance or guidance from either the professional body or the securities commission.

3. Sahajpreet Singh, CPA, obtained his designation in 2000. Since that time, he has built up a significant tax practice. In late 2015, a new client approached Sahajpreet and asked him to perform an audit engagement. Believing this could lead to a substantial amount of tax work in the future, Sahajpreet agreed, even though he had not taken any accounting or assurance courses for many years. In performing the audit engagement, Sahajpreet obtained an engagement letter, put the financial statements together based on the clients trial balance, and attached a review engagement report. The financial statements contained a material error.

Answer rating: 100% (QA)

i shuld be Indeendent while erfrming rfessinl servies In given se Bill is nt indeendent in metl ttit... View the full answer