Problem
A. Assume that you are a sole practitioner who provides primarily tax and compilation services. A married couple, John and Susie, have been your tax clients for several years. However, they are going through a divorce. They both want you to continue providing tax planning services while the divorce is proceeding. Is there a conflict of interest if you continue to provide tax services for both John and Susie? Provide the specific reference relevant to this situation.
B. Assume that your CPA firm is considering advertising to increase its client base and would like to promote itself as being able to generate the lowest tax liability and/or highest return in the region. Provide the specific code reference that answers whether this approach complies with the code of ethics.
C. Your CPA firm has been auditing the financial statements of XYZ Company for several years. Your assistants have approached you and asked if they can omit the confirmation of XYZ's accounts receivable. Identify the paragraph from the standards that will describe the circumstances under which the confirmation of accounts receivable may be omitted.
D. As a CPA who is now working in an accounting role at a manufacturer, you have been pressured by your supervisor to make journal entries that you believe would be misleading. After discussing the issue with the supervisor and management one level above them, the issue has still not been resolved in a satisfactory manner. You remember that your auditing professor discussed subordination of judgment a few years ago, but you do not remember the specifics and are under pressure to make decisions. Provide the specific paragraph from the code of ethics that addresses safeguards that you might consider which will reduce threats to code compliance to an acceptable level.