Two CPAs are good friends as well as partners together in a CPA firm.They recently invested their money together to buy an apartment building.One of the tenants in the apartment building is an employee of their CPA firm,and another tenant is the father of one of the two CPAs.The father's lease terminates soon and the father wishes to renew the lease at the same rental amount that he currently is paying.Under the AICPA's Code of Professional Conduct:
A) Two conflicts of interest exist
B) The father's status as a tenant creates a conflict of interest that cannot be corrected by safeguards
C) The father's status as a tenant creates a conflict of interest that can be remedied by safeguards
D) No conflicts of interest exist

Question

Quizplus · Accepted Answer

The father's status as a tenant creates a potential conflict of interest for the CPAs under AICPA's Code of Professional Conduct. However, this conflict can be remedied by safeguards. The CPAs can disclose the conflict to their clients, the tenants, and establish procedures to ensure that the lease renewal decision is made in the best interest of all parties involved. As long as the CPAs demonstrate their independence, integrity, and professionalism in their decision-making process, there should be no violation of the Code of Professional Conduct.

Two CPAs Are Good Friends as Well as Partners Together