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The following scenarios might constitute a violation of the AICPAs Code of Professional Conduct.

1. John, CPA, performs various management services for Blue Corporation including bookkeeping and preparing tax returns, but does not perform the audit function. One management service involved a needs assessment on computers and the identification of equipment to meet those needs. John recommended a product sold by a computer store, which has agreed to pay Murray a 15% commission if the Blue Company purchases it.
2. Brad, CPA, was overbooked for the next few months. When a prospective client asked if he would conduct the next years audit, he declined but referred them to Fred, CPA. Fred paid Brad $3,000 for the referral.
3. Betty, CPA, signed on to perform an inventory control study for a new client, ABC Company. Once the study is complete, she recommends a new inventory control system. Currently, ABC engages another audit firm to audit its financial statements. The financial arrangement is that ABC will implement the new systems and over the next 5 years, the will pay Betty 50% of the savings in inventory costs.
4. Jeff, CPA, has served as the auditor for the XYZ Corporation for many years. In addition, Jeff has performed other services for the company. This year, the Chief Financial Officer has asked Timberlake to perform a major computer system evaluation.
5. Due to the death of its CFO, an audit client had its external auditor, Derek, CPA, perform the CFOs job for two months until a replacement was hired.

Required:

Knowing the AICPA Code of Professional Conduct, answer the following:

1. For each of the five scenarios, indicate which principle or rule would be violated, or if none would be violated.
2. State why the rule would be violated.
3. Explain if there is a way to avoid breaking the rule by doing something different in these examples.

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