Kar, CPA, is a staff auditor participating in the audit engagement of Fort, Inc. Which of the following circumstances impairs Kar's independence? A. During the period of the professional egagement, Fort gives Kar tickets to a football game worth $75. B. Kar owns stock in a corporation that Fort's 401(K) plan also invest in. C. Kar's friend, an employee of another local accounting firm, prepares Fort's tax returns. D. Kar's sibling is an internal aditor employed part-time by Fort
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Kar, CPA, is a staff auditor participating in the audit engagement of Fort, Inc. Which of the following circumstances impairs Kar's independence?
A. During the period of the professional egagement, Fort gives Kar tickets to a football game worth $75.
B. Kar owns stock in a corporation that Fort's 401(K) plan also invest in.
C. Kar's friend, an employee of another local accounting firm, prepares Fort's tax returns.
D. Kar's sibling is an internal aditor employed part-time by Fort.
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- In the following case, identify all the violations of the rules of conduct of the Code of Professional Ethics, indicate the rule and explain why it was violated. Carmen and Carlos formed a corporation called CPA al servicio. 50% of all issued shares are divided between the two owner shareholders. Carmen in CPA and member of the AICPA Carlos is an appraiser. They announce themselves as members of the AICPA. They were hired to do an audit, the payment of which will be based on the findings of the CPA. Carmen commented with another CPA colleague on important aspects of the case to be audited. During the audit Carmen found deviations from the Generally Accepted Accounting Principles. Carmen gave an opinion in the report of her "unqualified without qualification."102 Integrity and objectivity } 201 General standards } 202 Compliance with standards } 203 Accounting Principles } 301 Confidential customer information } 302 Contingency expenses } 501 Acts of discredit } 502 Promotion or…Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includes managing the business affairs of the firm, and she is very worried about the amount of fees outstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, has not paid its audit fees for two years despite numerous discussions between Liona, their audit partner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management has promised the fees would have been paid before the audit report for this year has been published, Liona rang Ball this morning to ensure that the audit report was not issued becauseBroomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers that Ball is about to sign the audit report. (a) What can be done about it?Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includes managing the business affairs of the firm, and she is very worried about the amount of fees outstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, has not paid its audit fees for two years despite numerous discussions between Liona, their audit partner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management has promised the fees would have been paid before the audit report for this year has been published, Liona rang Ball this morning to ensure that the audit report was not issued because Broomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers that Ball is about to sign the audit report. Required: (a) Explain the ethical problem in this case. Why is it a problem? (b) What can be done about it?
- Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includes managing the business affairs of the firm, and she is very worried about the amount of fees outstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, has not paid its audit fees for two years despite numerous discussions between Liona, their audit partner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management has promised the fees would have been paid before the audit report for this year has been published, Liona rang Ball this morning to ensure that the audit report was not issued because Broomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers that Ball is about to sign the audit report. Required: (a) Explain the ethical problem in this case. Why is it a problem? . (150 – 200 words)(b) What can be done about it? (50 – 100 words)CPA Kara Rambo is the auditor of Ajax Corporation. Her audit independence will not be considered impaired if shea. Owns $1,000 worth of Ajax stock. b. Has a husband who owns $1,000 worth of Ajax stock. c. Has a sister who is the financial vice president of Ajax. d. Owns $1,000 worth of the stock of Pericles Corporation, which is controlled by Ajax as a result of Ajax’s ownership of 40 percent of Pericles’ stock, and Pericles contributes 3 percent of its total assets and income in Ajax’s financial statements.The following scenarios may result in non-compliance with one or more of the principles in the code of ethics, by the auditor or accountants. John, a chartered accountant who is employed by a state-owned enterprise, appeared before a commission of enquiry into financial irregularities that occurred under his direction. John denied his involvement but there was proof made available which indicated he was lying. John acknowledged that he had lied and then went on to state that he was instructed to do so by his superiors. Discuss if the chartered accountants or registered auditors in each of the scenarios above, have failed to comply with any of the fundamental ethical principles in the code of conduct.
- Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includesmanaging the business affairs of the firm, and she is very worried about the amount of feesoutstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, hasnot paid its audit fees for two years despite numerous discussions between Liona, their auditpartner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management haspromised the fees would have been paid before the audit report for this year has beenpublished, Liona rang Ball this morning to ensure that the audit report was not issued becauseBroomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers thatBall is about to sign the audit report. 4Required:(a) Explain the ethical problem in this case. Why is it a problem? (150 – 200words)(b) What can be done about it? (50 – 100 words)Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includesmanaging the business affairs of the firm, and she is very worried about the amount of feesoutstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, hasnot paid its audit fees for two years despite numerous discussions between Liona, their auditpartner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management has promised the fees would have been paid before the audit report for this year has beenpublished, Liona rang Ball this morning to ensure that the audit report was not issued becauseBroomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers thatBall is about to sign the audit report. Required:(a) Explain the ethical problem in this case. Why is it a problem?). (b) What can be done about it?Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includesmanaging the business affairs of the firm, and she is very worried about the amount of feesoutstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, hasnot paid its audit fees for two years despite numerous discussions between Liona, their auditpartner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management haspromised the fees would have been paid before the audit report for this year has beenpublished, Liona rang Ball this morning to ensure that the audit report was not issued becauseBroomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers thatBall is about to sign the audit report. 4Required:(a) Explain the ethical problem in this case. Why is it a problem? (b) What can be done about it?
- An auditor’s independence would not be considered impaired if she or he hada. Owned common stock of the audit client but sold it before the company became a client.b. Sold short the common stock of an audit client while working on the audit engagement.c. Served as the company’s treasurer for six months during the year covered by the audit butresigned before the company became a client.d. Performed the bookkeeping and financial statement preparation for the company, whichhad no accounting personnel and for which the president had no understanding ofaccounting principles.John works as a manager in the Aster office of an international public accounting firm. His father has just taken a position as a purchasing agent for one of the public accounting firm’s Aster clients. Has Mr. John’s independence been impaired with respect to this audit client? Has the public accounting firm’s independence been impaired if John does not work on the audit?While auditing the financial statements of Petty Corporation, the certified public accounting firm of Trueblue and Smith discovered that its client’s legal expense account was abnormally high. Further investigation of the records indicated the following: a. Since the beginning of the year, several disbursements totaling $15,000 had been made to the law firm of Swindle, Fox, and Kreip.b. Swindle, Fox, and Kreip were not Petty Corpora- tion’s attorneys.c. A review of the canceled checks showed that they had been written and approved by Mary Boghas, the cash disbursements clerk.d. Boghas’s other duties included performing the endof-month bank reconciliation.e. Subsequent investigation revealed that Swindle, Fox, and Kreip are representing Mary Boghas in an unrelated embezzlement case in which she is the defendant. The checks had been written in payment of her personal legal fees.1. What control procedures could Petty Corporation have employed to prevent this unauthorized use of cash?…