The Cast of Characters

Oneway Corporation is Williams’s audit and tax client. The three directors are the officers and the only three stockholders, each owning exactly one-third of the shares. President Raul Jack founded the company and is now nearing retirement. As an individual, he is also Williams’s tax client. Vice President Jana Jill manages the day-to-day operations. She has been instrumental in increasing the business and its profits. Jill’s individual tax work is done by CPA Corin Phil. Treasurer Chris Bill has been a long-term, loyal employee responsible for many innovative financial transactions and reports of great benefit to the business. He is Williams’s close personal friend and an individual tax client.

The Conflict

President Jack discussed with CPA Williams the tax consequences to him as an individual of selling his one-third interest in Oneway Corporation to Vice President Jill. Later, meeting with Bill to discuss his individual tax problems, Williams learns that Bill fears that Jack and Jill will make a deal, put him in a minority position, and force him out of the company. Bill says, “Jon, we’ve been friends a long time. Please keep me informed about Jack’s plans, even rumors. My interest in Oneway Corporation represents my life savings and my resources for the kid’s college. Remember, you’re little Otto’s godfather.”

Thinking back, Williams realized that Vice President Jill has always been rather hostile. Chances are that Phil would get the Oneway engagement if Jill acquires Jack’s shares and controls the corporation. Nevertheless, Bill will probably suffer a great deal if he cannot learn about Jack’s plans, and Williams’s unwillingness to keep him informed will probably ruin their close friendship.

Later, on a Dark and Stormy Night

Williams ponders the problem. “Oneway Corporation is my client, but a corporation is a fiction—only a form. The stockholders personify the real entity, so they are collectively my page 678 clients, and I can transmit information among them as though they were one person. Right? On the other hand, Jack and Bill engage me for individual tax work, and information about one’s personal affairs is really no business of the other. What to do? What to do?”

Discussion

Give Williams advice about alternative actions, considering the constraints of the AICPA Code of Professional Conduct.

It should benoted that if Jack and Jill gang up on Bill, John may lose the work that was going to Phil. Then this situation brought a typical 'Who is the client?' situation.

The appropriate relationships are individual engagements of John with Jack and Bill, because if the corporation were not a client, Jo would have confronted essentially a similar circumstance. In this circumstance, Jon is in an impossible-to-win condition.

In case, Jon does not tell him, he may lose the commitment and a generous offer of his own salary incidentally. On the off chance that Jo thinks about guidelines as the most noteworthy part of moral conduct, he will dismiss the demand of B with a thoughtful and influential clarification of the expert reason. A happy conclusion for this approach depends upon Bill's understanding of the typical condition he made for Jon.

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