Rick and Bob is a partner in a public accounting practice. His practice is popular with the

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Question:

Rick and Bob is a partner in a public accounting practice. His practice is popular with the local community because his senior partner is local. One of Rick’s clients, an elderly businessmen called Rico, insists that Rick always come to his office to discuss his financial arrangements. While there, Rico always insists on sharing coffees with Rick while they discuss business.

Rick has realised for a long time that this is normal with this client. He was very proud of his firm, his staff and the fact that the firm was still earning good fees. Part of Rick’s success was the effort he had put into nurturing the relationship with Rico. Due to this relationship Rico always felt comfortable with using Rick and his accountants.

However, there was a damaging side to this approach. Rick’s firm had become unhealthily dependent upon Rico. Worse, Rico seemed to become more demanding. Rick was also uneasy about his own behaviour when responding to Marshall's increasingly unreasonable demands. In the past Rico overruled his accountants on small matters, but now Rico demanded that Rick adjust data on more important issues. Rico tells Rick that he has an exciting new business venture in the pipeline and will tell him all about it at his next visit and Rico insists that Rick and his family visit his house for dinner one night, where he will discuss the new business in detail.

1.Take Rick Bob through the AAA decision-making model step-by-step and arrive at the best ethical outcome for him.

2. Rick Bob is a Chartered Accountant and so are the accountants in the firm, and therefore APES 110 applies to all of them.

Advise Rick of the provisions of APES 110 that are relevant here, especially the fundamental principles, types of threats and relevant safeguards. Advice Rick of what he must do to be compliant with APES 110.