Situation Violation of Code? If Yes – Rule(s) violated Explanation



Violation of Code?

If Yes – Rule(s) violated

Explanation of violation

e. Joe Pugh is a former partner in Pinnacle and Hughes, CPAs. Recently, he left the firm to become the chief operating officer of Ensworth Clothing, Inc., which is an audit client of Pinnacle and Hughes. In his new role, Pugh has no responsibilities for financial reporting. Pinnacle and Hughes made significant changes to the audit plan for the upcoming audit.


f. Odonnel Incorporated has struggled financially and has been unable to pay the audit fee to its auditor, Seale and Seale, CPAs, for the 2017 and 2018 audits. Seale and Seale is currently planning the 2019 audit.


g. Morris and Williams, a regional CPA firm, is providing information systems consulting to one of their publicly traded audit clients. They are assisting in the implementation of a new financial reporting system selected by management.


h. Chris Lancaster is a financial analyst in the financial reporting department of Cockerham International, a privately held corporation. Chris was asked to prepare several journal entries for Cockerham International related to transactions that have not yet occurred. The entries are reflected in financial statements that the company recently provided to the bank in connection with a loan outstanding due to the bank.

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