CPA Professional Code Of Conduct Quiz - 2

A CPA firm performs an audit of a large manufacturing company. One of the firm’s managers,who plans to provide a significant amount of tax services to the company, has a spouse who inheriteda small amount of stock in it. The manager does not work in the same office as the lead audit partner.Is the firm’s independence impaired?

A bank retains a CPA firm to perform an audit. During the period of the professionalengagement, a manager in the CPA firm obtains a mortgage from the bank. He works in the same office as the lead partner on the audit but does not provide any services to the bank. Is the firm’s independence impaired?

A CPA firm is considering hiring the controller of one of its audit clients as a part-timeindependent contractor during tax season. She would help prepare tax returns for other clients of the CPA firm, all of which are nonattest clients. The firm has two offices and she would be working out of the one that does not provide any services to her primary employer. If she is hired, would the CPA firm’s independence be impaired with respect to that client?

A small manufacturing company has asked a CPA firm to perform an audit. The company’scontroller is the engagement partner’s mother-in-law. Would the firm be considered independent for purposes of accepting the audit engagement?

 A multioffice CPA firm has been asked to perform an audit of a company, and the engagement will be handled by the Jersey City, New Jersey, office. Three firm managers, who work in a separate office, pooled their money to purchase the company’s stock. After the purchase, each owns 2% of that company’s outstanding common stock. The audit would not involve any members of the managers’ office. Is the firm independent to perform the engagement?

A partner in a multioffice CPA firm owns 2% of a potential audit client. The engagement wouldbe performed by an office with which he is not associated. The partner would not provide any services to the client nor be in a position to influence the engagement team. Is the firm independent to perform the audit?

A manager in a multioffice CPA firm serves on the board of directors of a potential reviewclient. The manager would not be assigned to provide services to the client nor located in the office that would perform the engagement. Is the firm independent to perform the review?

A partner’s dependent son works as an inventory clerk during the summer months for an auditclient of the firm. The partner is located in the office in which the lead audit engagement partner practices. Is the firm independent?