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: Using firm funds for personal use (home couch) shows a lack of honesty and moral uprightness, which violates the integrity principle.
• b: Failing to disclose a family - related business connection (mother is a co - owner of the audited company) when objectivity and independence are required (as an auditor) violates the objectivity and independence principle.
• c: Skipping required training (internal control training) despite policy updates shows a lack of diligence and proper professional effort, violating the due care principle.
• d: Forging a signature shows a lack of honesty and moral character (not acting in an upright manner), which violates the integrity principle.

Answer:

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