Question

A) Providing advice to a private company client on accounting for a merger with another private company.

B) Providing bookkeeping services to a private company. The source documents were prepare and authorized by the client.

C) Providing internal audit services to a public company that is not an audit client.

D) Implementing a financial information system designed by management for a private company

E) Recommending a tax shelter to a client that is publicly held. The services were preapproved by the audit committee.

F) Providing bookkeeping services to a public company. The services were preapproved by the audit committee of the company.

G) Providing internal audit services to a public company audit client with the preapproval of the audit committee.

Answer 1

• This is not in violation of the rules, CPA firms are allowed to provide merger advice with private companies.
• This is not in violation of the rules because it is a public company. According to the AICPA rules this is permissible since all documents are from the company - however if this was a public firm SOX/SEC would prohibit this
• This is not in violation of SOX/SEC because the public company is not also an audit client, the CPA firm is allowed to provide internal auditing services.
• This is not in violation of the SOX/SEC because it is a private company. AICPA code states that as long as the client's management makes decisions regarding the design, a CPA firm can help with implementation