WGU D550 Task 2 Ethics of Accountant | Actual verified
study complete Solutions | A+ Graded | Spring 2026 |
100% correct
D550 Ethics for Accountant
Western Governors University
Report to Perfect Audit LLP’s Managing Partner - Findings of Ethical Code Violations on Lone Star Athletic
Wear Audit
Violation #1: Independence Impairment / Conflict of Interest
Code Citation: 22 Tex. Admin. Code §501.73(b) and §501.73(d)
Joe Williams is the audit manager in this project. His spouse is currently the Vice-President of Marketing
at Lone Star Athletic Wear and holds shares in the company. So there are familiarity and financial
interest threats. His independence is impaired because a close family member holds a key position in the
client’s firm and has an ownership interest in it. He said his wife mentioned many positive things about
Lone Star, which, during the audit, may significantly influence his decision and judgments.
Recommended Action: The firm should remove Joe Williams (audit manager) from the engagement and
reassign him to a non-related client. This process will help restore independence in both face and
appearance. It will also be a good opportunity to consult Joe for legal/ethics counsel, as well as to
reinforce an ethical work environment within the firm from leadership. Additionally, the firm may have
to consider declining or resigning from the engagement to protect both the client and the audit firm
from further disagreement over financial reporting.
Violation #2: Self-Review Threat
Code Citation: 22 Tex. Admin. Code §501.73(a) and §501.74(a)
The audit firm assisted in preparing Lone Star Athletic Wear’s financial statements and is now auditing
them. As auditors, they must maintain integrity and objectivity in their professional accounting work and
must not place themselves in a position where they evaluate their own work.
Recommended Action: The firm should discontinue performing both the preparation and audit of
financial statements for Lone Star Athletic Wear, as well as for any similar engagements going forward.
Responsibility for preparing the financial statements should be assigned to the client’s management or
an independent third party, while the audit team focuses solely on performing an objective evaluation.
study complete Solutions | A+ Graded | Spring 2026 |
100% correct
D550 Ethics for Accountant
Western Governors University
Report to Perfect Audit LLP’s Managing Partner - Findings of Ethical Code Violations on Lone Star Athletic
Wear Audit
Violation #1: Independence Impairment / Conflict of Interest
Code Citation: 22 Tex. Admin. Code §501.73(b) and §501.73(d)
Joe Williams is the audit manager in this project. His spouse is currently the Vice-President of Marketing
at Lone Star Athletic Wear and holds shares in the company. So there are familiarity and financial
interest threats. His independence is impaired because a close family member holds a key position in the
client’s firm and has an ownership interest in it. He said his wife mentioned many positive things about
Lone Star, which, during the audit, may significantly influence his decision and judgments.
Recommended Action: The firm should remove Joe Williams (audit manager) from the engagement and
reassign him to a non-related client. This process will help restore independence in both face and
appearance. It will also be a good opportunity to consult Joe for legal/ethics counsel, as well as to
reinforce an ethical work environment within the firm from leadership. Additionally, the firm may have
to consider declining or resigning from the engagement to protect both the client and the audit firm
from further disagreement over financial reporting.
Violation #2: Self-Review Threat
Code Citation: 22 Tex. Admin. Code §501.73(a) and §501.74(a)
The audit firm assisted in preparing Lone Star Athletic Wear’s financial statements and is now auditing
them. As auditors, they must maintain integrity and objectivity in their professional accounting work and
must not place themselves in a position where they evaluate their own work.
Recommended Action: The firm should discontinue performing both the preparation and audit of
financial statements for Lone Star Athletic Wear, as well as for any similar engagements going forward.
Responsibility for preparing the financial statements should be assigned to the client’s management or
an independent third party, while the audit team focuses solely on performing an objective evaluation.
