Question 1 For each of the following scenarios, indicate whether in your opinion it is a violation of the- HKICPA Code-of Ethics. Specifically, for each scenario, choose one of the following options: (1)not likely to be a violation; (2) likely to be aviolation; or (3)clearly a violation. For each- scenario, clearly explain your reasoning. e 3. Chan and Mo, CPAS, "perform the annual financial statem ent audit for SoCal·Ltd. Ann Mo, the partner in charge of the SoCal audit, owns shares in the Greenfield Investment Company. Greenfieldowns approximately ten percent of the outstanding common stock of SoCal Ltd. Approximately 60 percent of SoCal's common stock is owned by another large investment fund that is independent of Chan and Mo, CPAS. Consequently, Greenfieldcannot exert significant control over SoCal. The am ount of Ann Mo's investment in Greenfieldis immaterial to her net worth.e 4. David Lam, CPA, is assigned to serve as the audit man ager on the Safety Bank- engagement. David recently obtained a personal loan from Safety Bank to finance the purchase of a flat. This loan is material to David's net worth. However, the loan was made under normal lending procedures and terms. 5. Haskins and Sells, CPAS, is a large accounting firm that provides a wide array of attestation, taxation and consulting services. The firm has recently accepted the audit- engagement for Landmark Casinos, a listed entity. Landmark provides its employees with- post-retirementmedical benefits, which results in material annual expenses and liabilities. Haskins and Sells agrees to assist Landmark in estimating the annual expense and year-end- liability associatedwith its post-retirement benefit plan for the year under audit. These services would -be provided by the consulting division of Haskins and Sells, which has minimal interaction with the auditing division. -
Question 1 For each of the following scenarios, indicate whether in your opinion it is a violation of the- HKICPA Code-of Ethics. Specifically, for each scenario, choose one of the following options: (1)not likely to be a violation; (2) likely to be aviolation; or (3)clearly a violation. For each- scenario, clearly explain your reasoning. e 3. Chan and Mo, CPAS, "perform the annual financial statem ent audit for SoCal·Ltd. Ann Mo, the partner in charge of the SoCal audit, owns shares in the Greenfield Investment Company. Greenfieldowns approximately ten percent of the outstanding common stock of SoCal Ltd. Approximately 60 percent of SoCal's common stock is owned by another large investment fund that is independent of Chan and Mo, CPAS. Consequently, Greenfieldcannot exert significant control over SoCal. The am ount of Ann Mo's investment in Greenfieldis immaterial to her net worth.e 4. David Lam, CPA, is assigned to serve as the audit man ager on the Safety Bank- engagement. David recently obtained a personal loan from Safety Bank to finance the purchase of a flat. This loan is material to David's net worth. However, the loan was made under normal lending procedures and terms. 5. Haskins and Sells, CPAS, is a large accounting firm that provides a wide array of attestation, taxation and consulting services. The firm has recently accepted the audit- engagement for Landmark Casinos, a listed entity. Landmark provides its employees with- post-retirementmedical benefits, which results in material annual expenses and liabilities. Haskins and Sells agrees to assist Landmark in estimating the annual expense and year-end- liability associatedwith its post-retirement benefit plan for the year under audit. These services would -be provided by the consulting division of Haskins and Sells, which has minimal interaction with the auditing division. -
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter1: The Demand For And Supply Of Financial Accounting Information
Section: Chapter Questions
Problem 1C
Related questions
Question
Transcribed Image Text:Question 1
For each of the following scenarios, indicate whether in your opinion it is a violation of the
HKICPA Code of Ethics. Specifically, for each scenario, choose one of the following options:
(1)not likely to ·be a violation; (2) likely to be aviolation; or (3) clearly a violation. For each-
scenario, clearly explain your reasoning.
3. Chan and Mo, CPAS, perform the annual financial statement audit for SoCal Ltd. Ann Mo,
the partner in charge of the SoCal audit, owns shares in the Greenfield Investment Company.
Greenfieldowns approximately ten percent of the outstanding common stock of SoCal·Ltd.
Approximately 60percent of SoCal's common stock is owned by another large investment-
fund that is independent of Chan and Mo, CPAS. Consequently, Greenfieldcannot exert
significant controlover SoCal. The amount of Ann Mo's investment in Greenfieldis
immaterial to her net worth. ..
4. David Lam, CPA, is assignedto serve as the audit manager on the Safety Bank
engagement. Davidrecently obtained a personal loan from Safety Bank to finance the
purchase of a flat. This loan is material to David's net worth. However, the loan was made
under normal 1lending procedures and terms.<
5. Haskins and Sells, CPAS, is alarge accounting firm that provides a wide array of
attestation, taxation and consulting services. The firm has recently accepted the audit-
engagement for Landmark Casinos, a listed entity. Landmark provides its employees with-
post-retirem entmedical benefits, which results in material annual expenses and·liabilities.
Haskins and Sells agrees to assist Landmark in estimating the annual expense and year-end-
liability associated with its post-retirement benefit plan for the year under audit. These
services would be provided by the consulting division of Haskins and Sells, which has
minimal interaction with the auditing division. -
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning