a.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: The basic principles of corporate governance that appear to have been missing.
b.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To examine: Whether or not external auditors can expect the effectiveness of corporate governance.
c.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: The manner in which external auditors might respond to concerns about the quality of governance.
d.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: Whether or not the company should have an independent chair.
e.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: Whether or not the CEO of the company should be removed.
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Chapter 2 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
- Mary Ribukh was hired as a staff auditor of LGY and Company in 2005. In December 2012, he transferred to Quilava and Associates. In 2014, he returned back to LGY and Company until his retirement in 2020 at the age of 55. Question 1: Are the retirement benefits taxable to Anton? Question 2: Suppose he was terminated from employment due to dishonesty. Is the separation pay taxable to Anton? Question 3: Suppose he was terminated from employment due to the merger of the two audit firms Will the separation pay be taxable to Anton? Yes, Yes, Yes No, Yes No No Yes, Yes Yes, No, Noarrow_forwardAOL, LLC, mistakenly made public the personal information of 650,000 of its members. The members filed a suit in California, alleging violations of federal law and California state law. The member agreement between AOL and its members included a provision declaring Virginia as the location of any court dispute. AOL asked the court to dismiss the suit on the basis of that "forum-selection" clause in its member agreement. Under a previous decision of the United States Supreme Court, a forum-selection clause is unenforceable "if enforcement would contravene a strong public policy of the forum in which suit is brought." California courts previously have declared in other cases that clauses similar to the AOL clause contravene a strong public policy. If the court applies the doctrine of stare decisis, will it dismiss the suit? Explain. [Doe 1 v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009)] (See The Common Law Tradition.)arrow_forwardIn 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…arrow_forward
- Katy Kirkland, a former employee of the Sand Dune Resorts, Inc., owned 500 shares of stock (10%) in the company. Kirkland was terminated after five years of employment at Sand Dunes; however, she became part owner of Holiday Isles, Inc., a competitor of Sand Dunes. When Sand Dunes made Kirkland an offer to purchase her stocks, she requested access to Sand Dunes' corporate books to determine the value of her 500 shares of stock. Sand Dunes refused on the basis that Kirkland was a competitor. Does Kirkland have a right to view the books? Why or why not? Propose a solution to the situation.arrow_forwardLois Kenseth, president of Sycamore Corporation, is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation's CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a “good” offer. Kenseth knows the corporation's cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the weighted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.) Instructions Answer the following questions. a. Who are the stakeholders in this situation? b.…arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningIndividual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT