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D550 " Ethics for AccountantsName " Student ID Task 2To: Jo, Thesis of Accounting

D550 " Ethics for AccountantsName " Student ID Task 2To: John Maelstrom, Senior Partner, Awesome Accounting AssociatesFrom: Name, CPADear Mr. Maelstrom,I am writing to report on some of my findings while conducting an audit of our client, Lone Star Athletic Wear (Lone Star), along with a couple recommendations of actions that should be taken by Awesome Accounting Associates.I have discovered at least 3 violations of the Lone Star Code of Ethics forSenior Officers:1. Section III-A (Ethical Standards of Conduct) states that SeniorOfficers omust avoid any actual or apparent conflict of inte

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D550
Ethics for Accountants
Name
Student
ID
Task 2
To:
John Maelstrom, Senior Partner,
Awesome
Accounting Associates
From: Name,
C
P
A
Dear Mr. Maelstrom,
I
am writing to report
on
some
of my
findings while conducting an audit of
our client, Lone Star A
thletic
Wear (Lone Star), along with a couple
recommendations
of
actions that should be taken
by
Awesome
Accounting
Associates.
I
have discovered at least 3 violations
of
the Lone Star Code
of
Ethics for
Senior
Off
i
cers:
1. Section
III-A
(Ethical Standards
of
Conduct) states that
Senio
r
Officers “must avoid any actual or apparent conflict
of
interest”, but it
has come to
my
attention that Lone Star CEO, Sam Johnson,
has an
undisclosed relationship with Sun City Sports CEO, James
W
illiams.
Williams
is
Johnson’s
former college roommate and this relationship
appears to violate the policy to avoid even the appearance
of
a
confl
i
ct
of
interest, as two years ago, Lone Star bought a majority
stake
in
Sun
City
Sports.
2. Section
III-B
(Disclosure Standards) states that Senior Officers
“are
responsible for upholding Lone Star’s policy to make full,
fai
r
,
accurate, timely and understandable disclosure
in
compliance with all
applicable securities laws and regulations and company policies”,
but
I
have discovered that significant related party transactions involving
Johnson and Williams have been intentionally hidden
by
Lone Star for
the last two years.
3. Section
III-B
(Disclosure Standards) also states that Senior
Off
i
cers
“will make diligent efforts to ensure that the Lone
Star finance
department has the appropriate resources and functional expertise to
properly fulfill its responsibilities”, but
I
have been informed that
Sun
09:34:36 GMT -06:00
pf2

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D550 – Ethics for Accountants Name – Student ID Task 2 To: John Maelstrom, Senior Partner, Awesome Accounting Associates From: Name, CPA Dear Mr. Maelstrom, I am writing to report on some of my findings while conducting an audit of our client, Lone Star Athletic Wear (Lone Star), along with a couple recommendations of actions that should be taken by Awesome Accounting Associates. I have discovered at least 3 violations of the Lone Star Code of Ethics for Senior Officers:

  1. Section III-A (Ethical Standards of Conduct) states that Senior Officers “must avoid any actual or apparent conflict of interest”, but it has come to my attention that Lone Star CEO, Sam Johnson, has an undisclosed relationship with Sun City Sports CEO, James Williams. Williams is Johnson’s former college roommate and this relationship appears to violate the policy to avoid even the appearance of a conflict of interest, as two years ago, Lone Star bought a majority stake in Sun City Sports.
  2. Section III-B (Disclosure Standards) states that Senior Officers “are responsible for upholding Lone Star’s policy to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable securities laws and regulations and company policies”, but I have discovered that significant related party transactions involving Johnson and Williams have been intentionally hidden by Lone Star for the last two years.
  3. Section III-B (Disclosure Standards) also states that Senior Officers “will make diligent efforts to ensure that the Lone Star finance department has the appropriate resources and functional expertise to properly fulfill its responsibilities”, but I have been informed that Sun 09:34:36 GMT -06:

City Sports has hired several of Johnson’s relatives for key accounting positions for which they are not qualified and for which they are apparently being overpaid. While this is occurring at Sun City Sports, Lone Star owns a majority stake in Sun City and I believe this arrangement violates not only this section of the code of conduct, but also Section III-A which prohibits conflicts of interest. In light of these violations of the Code of Ethical Conduct, I recommend that Awesome Accounting Associates takes the following actions:

  1. Create a detailed report outlining these violations along with all the evidence we have gathered and submit the information to Lone Star’s internal Audit Committee and/or Lone Star’s Board of Directors for review. We should make it clear that we cannot in good conscience provide an unqualified audit report while these issues are outstanding.
  2. If Lone Star’s Audit Committee and Board of Directors take immediate action to address these issues, we should continue with the audit and ensure that we maintain our integrity by issuing a report consistent with our findings. If Lone Star’s Audit Committee and Board of Directors try to whitewash the situation and don’t take decisive action to resolve these issues in an ethical and satisfactory manner, Awesome Accounting Associates may want to consider withdrawing from the engagement since Lone Star will have demonstrated a willingness to ignore ethical violations and our reputation may suffer from our association with them. Please contact me if you have further questions or concerns. Name, CPA Awesome Accounting Associates 09:34:36 GMT -06: