31 Jan a. Daleiden wishes to

The firm of McGraw and West, CPAs, has two offices, one in Phoenix and one in San Diego. The firm has audited the Cameron Corporation out of its Phoenix office for the past five years. For each of the following independent cases, which occurred during the year under audit, indicate whether the independence of either (a) the CPA involved or

(b) the firm would be impaired.

a. Mary McGraw, a partner in the San Diego office, fell wildly in love with Bill Smith, the treasurer for Cameron Corporation. They were married in Las Vegas. During the week, McGraw still lives in San Diego and works in that office, while Bill Smith lives in Phoenix, working for Cameron. On weekends they commute to their home in Yuma. Mary does not participate in the engagement.

b. Jim West is the father of Will West, a Phoenix partner. Jim West has a material investment in Cameron. Will West is unaware of his father’s investment, but does participate in the engagement.

c. Bill Johnson, a senior in the San Diego office, has a material investment in the capital stock of Cameron. He does not participate in the engagement.

d. Sandra Steversen, a staff assistant in the Phoenix office, works on the Cameron audit. Her uncle works as the chief accounting officer for Cameron.

e. Bill Adams, a senior in the Phoenix office, does not work on the Cameron audit, but owns 9 percent of Cameron’s outstanding equity (common stock).

James Daleiden, CPA, is interested in expanding his practice through acquisition of new clients. For each of the following independent cases, indicate whether Daleiden would violate the AICPA Code of Professional Conduct by engaging in the suggested practice and explain why.

a. Daleiden wishes to form a professional corporation and use the name “AAAAAAAA the CPAs,” to obtain the first ad in the yellow pages of the telephone book.

b. Daleiden wishes to prepare a one-page flyer which he will have his son stuff on the windshields of each car at the Pleasant Valley shopping mall. The flyer will outline the services provided by Daleiden’s firm and will include a $50-off coupon for services provided on the first visit

c. Daleiden has a thorough knowledge of the tax law. He has a number of acquaintances who prepare their own tax returns. He proposes to offer to review these returns before they are filed with the Internal Revenue Service. For this review, he will charge no fee unless he is able to identify legal tax savings opportunities. He proposes to charge each individual one third of the tax savings he is able to identify.

d. Daleiden and his associates audit a number of municipalities. He proposes to contact other CPAs and inform them of his interest in obtaining more of these types of audits. He offers a $500 “finder’s fee” to CPAs who forward business to him.

e. Daleiden wishes to advertise that if he is hired to perform the audit, he will discount his fees on tax services (he does intend to grant a discount).