Problem:
Each of the following and circumstances involves the possible violation of Code of Ethics. Indicate whether each situation violates Code and if so, why?
Situations:
1. Zeker & Associates audits the Housing association in which the parents of the member of firm own a unit and reside. The unit is material to the parents’ net worth, and the member participates in engagement.
2. Dip-It Paint Corporation needs an audit for the current year. However, Dip-It hasn’t paid Allen & Allen the fees due for tax-related services performed 2years ago. Dip-It issued Allen & Allen a note for the unpaid fees and proceeded with audit services.
3. Jill Burnet, professional accountant in business, was appointed by Cooper Corporation to supervise its accounting department in preparing financial statements and presenting them to senior management. Because of considerable time incurred on other financial activities, Burnet was incapable to supervise the accounting staff adequately. It is later discovered that Cooper’s financial statements hold false and misleading information.