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
