Question

for each of the situations listed, identify which of the three principles (integrity, objectivity and independence, or due care) from the aicpa code of professional conduct is violated. assume all persons listed in the situations are members of the aicpa. (note: refer to the aicpa code of professional conduct.)
a. phoenix, the managing partner of an audit firm, has the authority to approve all transactions. as a result, they use firm funds to purchase a new couch for their home.
b. essence is a first - year auditor for a large public accounting firm. she is assigned to audit bike global, a regional travel agency specializing in bike tours. essence does not disclose to her firm that her mother is a co - owner of bike global, since essence knows that she will not allow herself to be influenced by her mom.
c. liam has been working for his company for ten years and is required to attend internal control training annually. liam does not attend the training this year because he feels he already understands the policies. significant policy updates have occurred during the past year.
d. brooke, an accounts payable clerk, must have her manager sign off on all checks over $10,000. her manager is out of the office this week, so brooke forges her manager’s signature to make sure the check is sent out on time.

Explanation:

a. Phoenix misuses firm funds for personal gain, violating integrity which requires honest and ethical behavior.
b. Essence fails to disclose a family - related conflict of interest. Objectivity and independence demand that auditors avoid situations that could impair their judgment. Her mother's ownership in the audited firm is a conflict, and not disclosing it violates objectivity and independence.
c. Liam does not attend training despite policy updates. Due care requires that professionals keep their knowledge and skills up - to - date.
d. Brooke forges a signature. Integrity is violated as this is an unethical and dishonest act.

Answer:

a. Integrity
b. Objectivity and independence
c. Due care
d. Integrity