Snicker and Doodle formed a corporation called Financial Advisors, Inc., each individual taking 50% of the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Snicker and Doodle formed a corporation called Financial Advisors, Inc., each individual taking 50% of the authorized common stock. Snicker is a CPA and a member of the AICPA and NYSSCPA. Doodle is a CPCU (Chartered Property Casualty Underwriter). The corporation performs auditing, accounting, and tax services under Snicker's direction and insurance services under Doodle's supervision. The opening of the Company's office was announced by a full- page ad in the New York Times, in which the company guaranteed a tax refund to all clients. One of the Company's audit clients was the Super De Dooper Company, a nonissuer. Super De Dooper had total assets of $750,000 and total liabilities of $420,000. In the course of the audit, Snicker found that Super De Dooper's building with a book value of $400,000 was pledged as collateral for a fifteen-year-term note in the amount of $360,000. The Company's financial statements did not disclose that the building was pledged as collateral for the note. However, as the failure to disclose the lien had no effect on either the value of the assets or the amount of the liabilities and the audit was otherwise satisfactory, Snicker issued an unmodified opinion on the financial statements of Super De Dooper. Approximately three months after the audit report and the financial statements were released, Snicker learned that an insurance company was planning to loan Super De Dooper $300,000 in the form of a first-mortgage on the building. Snicker immediately realized that the insurance company was unaware of the existing lien on the building. Accordingly, Snicker told Doodle to inform the insurance company of the fact that Super De Dooper's building was already pledged as collateral for the term note. Required: 1. Identify and discuss the ethical implications of those acts by Snicker that were in violation of the AICPA Code of Professional Conduct. 2. Discuss the ethical implications if Super De Dooper offered Snicker a bonus of $50,000 if the insurance company loan was granted. 3. Discuss the ethical implications if the audit fees for the prior year were still outstanding when Snicker was about to issue the current-year audit report. Snicker and Doodle formed a corporation called Financial Advisors, Inc., each individual taking 50% of the authorized common stock. Snicker is a CPA and a member of the AICPA and NYSSCPA. Doodle is a CPCU (Chartered Property Casualty Underwriter). The corporation performs auditing, accounting, and tax services under Snicker's direction and insurance services under Doodle's supervision. The opening of the Company's office was announced by a full- page ad in the New York Times, in which the company guaranteed a tax refund to all clients. One of the Company's audit clients was the Super De Dooper Company, a nonissuer. Super De Dooper had total assets of $750,000 and total liabilities of $420,000. In the course of the audit, Snicker found that Super De Dooper's building with a book value of $400,000 was pledged as collateral for a fifteen-year-term note in the amount of $360,000. The Company's financial statements did not disclose that the building was pledged as collateral for the note. However, as the failure to disclose the lien had no effect on either the value of the assets or the amount of the liabilities and the audit was otherwise satisfactory, Snicker issued an unmodified opinion on the financial statements of Super De Dooper. Approximately three months after the audit report and the financial statements were released, Snicker learned that an insurance company was planning to loan Super De Dooper $300,000 in the form of a first-mortgage on the building. Snicker immediately realized that the insurance company was unaware of the existing lien on the building. Accordingly, Snicker told Doodle to inform the insurance company of the fact that Super De Dooper's building was already pledged as collateral for the term note. Required: 1. Identify and discuss the ethical implications of those acts by Snicker that were in violation of the AICPA Code of Professional Conduct. 2. Discuss the ethical implications if Super De Dooper offered Snicker a bonus of $50,000 if the insurance company loan was granted. 3. Discuss the ethical implications if the audit fees for the prior year were still outstanding when Snicker was about to issue the current-year audit report.
Expert Answer:
Answer rating: 100% (QA)
1 Ethical Implications of Violations of the AICPA Code of Professional Conduct Independence Snicker violated the independence requirement by issuing a... View the full answer
Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
Posted Date:
Students also viewed these accounting questions
-
Gilbert and Bradley formed a corporation called Financial Services, Inc., each taking 50% of the authorized common stock. Gilbert is a CPA and a member of the American Institute of CPAs. Bradley is a...
-
Thomas Gilbert and Susan Bradley formed a professional corporation called Financial Services Inc.A Professional Corporation, each taking 50 percent of the authorized common stock. Gilbert is a CPA...
-
What is the output produced from the following statements? System.out.println("name\tage\theight"); System.out.println("Archie\t17\t5'9\""); System.out.println("Betty\t17\t5'6\"");...
-
How much must be set aside at the end of each six months by the Fabulous Toy Company to replace a $155,000 piece of equipment at the end of eight years if the account pays 6% annual interest...
-
How can I describe the tables in the Northwind database, the primary and foreign key relationships which include cardinality? How can I describe the business processes that the online transaction...
-
Name the various elements of a steam condensing plant.
-
You are planning to estimate a short-run production function for your firm, and you have collected the following data on labor usage and output: Labor usage Output 3 ..................... 1 7...
-
A company is considering two mutually exclusive projects. The projected cash flows are as follows: Cash Flows:A Cash Flows:B Year 0 -$245,000 -$250,000 1 $70,500 $60,000 2 $85,000 $60,000 3 $90,000...
-
List the current characteristics of each environmental factor as they relate to REI. How does the current U.S. economy affect REI retail operations? How does the current global economy affect REI...
-
7) Which of the following is an example of data? A) words B) a newspaper C) newspaper report D) a bank statement
-
Verify that det AB = (det A) (det B) for the matrices in Exercises 37 and 38. (Do not use Theorem 6.) 37. A = [ 38. A = == [ 1 ], B = [3 -2]. B = [11]
-
Consider the thin (steel) 200 mm long tapered plate varying width from 40 mm to 5 mm along the length. Plate is fixed at the top. The plate has uniform thickness t = 1 mm, Young's modulus E = 200 x...
-
=During the year, Beta sold (issued) additional common stock for $5,000 and declared dividends of $1,000. Beta began the year with a credit balance in Retained Earnings of $20,000 and a beginning...
-
The family of three lives in the south suburbs of Chicago. Therefore, the costs associated with household expenses are consistent with the price of things in the south suburbs. Assume that the single...
-
Respond that the following statements are TRUE or FALSE: 1) A predetermined overhead allocation rate is used to allocate direct materials cost to various processes or departments. 2) The adjusting...
-
Ball bearings are widely used in industrial applications. You work for an industrial food machinery manufacturer and your role is to design the driveshaft assembly on a new type of equipment that...
-
Eq. 7.36a is written for the conservation of momentum in y direction. Obtain Eq. 7.36-b wherein the stream function is independent variable. Eq. 7.36(a,b) y - v v +(1-y/R)v- + momentum: u u R-y + R P...
-
Using Maslen method, find the approximate value of pressure and density at the junction of the sphere and the cone of Problem 7.29 at Mach number 8. Problem 7.29 An empirical way to determine shock...
-
Show that the derivative of the boundary layer edge velocity is given by Eq. 7.64 for the figure given below. Eq. 7.64 M>>1 Ue dx R dy/dx = 1/R
Study smarter with the SolutionInn App