Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 40OQ
a.
To determine
Explain whether firm B would impair independence or not.
b.
To determine
Explain whether firm B would impair independence or not.
c.
To determine
Explain whether firm B would impair independence or not.
d.
To determine
Explain whether firm B would impair independence or not.
e.
To determine
Explain whether firm B would impair independence or not.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The firm of Bulaklak and Bubuyog, CPAs, has two offices, one in Quezon City and one in Solano, Nueva Vizcaya. The firm has audited the Hardin Corporation out of its QC office for the past 5 years. For each of the following independent cases, which occurred during the year under audit, indicate whether the independence of either (1) the CPA involved or (2) the firm would be impaired.
Bango Bulaklak, a partner in the Solano Branch, fell wildly in love with Jerry Bee, the treasurer for Hardin Corporation. They were married in Las Vegas. During the week, Bulaklak still lives in Solano and works in that branch, while Jerry Bee lives in QC, working for Hardin. On weekends they commute to their home in Santiago City. Bulaklak does not participate in the engagement.
Big Bubuyog is the father of Small Bubuyog, a QC partner. Big B has a material investment in Hardin. Small B is unaware of his father’s investment, but does participate in the engagement.
Sally, a senior in the Solano office, has…
For each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFAC’s Code of Ethics for Professional Accountants and the rationale for the applicable guideline.
Paul Asante, CPA, discloses confidential information in a peer review of the firm’s quality control procedures.
Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks.
Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work.
For each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFAC's Code of Ethics for professional accountants and the rationale for the application guideline. Asante, CPA, discloses confidential information in a peer review of the firms quality control procedures.
Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks.
Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work.
Chapter 3 Solutions
Connect Access Card for Principles of Auditing & Other Assurance Services
Ch. 3 - What is meant by the term ethical dilemma?...Ch. 3 - What are the two major types of constraints on...Ch. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - Prob. 5RQCh. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Bill Scott works as a manager in the Phoenix...Ch. 3 - Prob. 9RQCh. 3 - Prob. 10RQ
Ch. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - Prob. 16RQCh. 3 - Prob. 17RQCh. 3 - Prob. 18RQCh. 3 - Prob. 19RQCh. 3 - Prob. 20RQCh. 3 - Prob. 21RQCh. 3 - Prob. 22RQCh. 3 - Prob. 23RQCh. 3 - Prob. 24RQCh. 3 - Prob. 25RQCh. 3 - Prob. 26RQCh. 3 - Prob. 27QRACh. 3 - Prob. 28QRACh. 3 - Prob. 29QRACh. 3 - Prob. 30QRACh. 3 - Prob. 31QRACh. 3 - Prob. 32QRACh. 3 - Ron Barber, CPA, is auditing the financial...Ch. 3 - Prob. 34AOQCh. 3 - Prob. 34BOQCh. 3 - Prob. 34COQCh. 3 - Prob. 34DOQCh. 3 - Prob. 34EOQCh. 3 - Prob. 34FOQCh. 3 - Prob. 34GOQCh. 3 - Prob. 34HOQCh. 3 - Prob. 34IOQCh. 3 - Prob. 34JOQCh. 3 - Prob. 34KOQCh. 3 - Prob. 34LOQCh. 3 - Prob. 35OQCh. 3 - Prob. 36OQCh. 3 - Prob. 37OQCh. 3 - Prob. 38OQCh. 3 - Prob. 39OQCh. 3 - Prob. 40OQCh. 3 - Prob. 41OQCh. 3 - Prob. 42OQCh. 3 - Gary Watson, a graduating business student at a...Ch. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49ITCCh. 3 - Prob. 50ITCCh. 3 - Prob. 51RDC
Knowledge Booster
Similar questions
- You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for theaudits of the following four independent entities for the year ended 30 June 2018:(a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 percent of its expenses, excluding salaries and allowances(b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is…arrow_forwardFor each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFAC’s Code of Ethics for Professional Accountants and the rationale for the applicable guideline. a) Paul Asante, CPA, discloses confidential information in a peer review of the firm’s quality control procedures. b) Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks. c) Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work. Additional information: Please add references or citations.arrow_forwardYou are an audit senior of Beckham & Co and have been allocated to the audit of Willian Co (Willian), a listed company which has been an audit client for eight years and specializes in manufacturing musical instruments.Spice Posh was the audit engagement partner for Willian and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, ShakiraPique, has suggested that in order to maintain a close relationship with Willian, Spice should undertake the role of independent review partner this year. In addition, Willian has requested that Spice assist them by attendingtheir audit committee meetings, as a non-executive director has recently left the company. Willian has also asked Shakira and the other partners at Beckham & Co to help them in recruiting a new non-executive director.The total fees received by Beckham & Co for last year equated to 16% of the firm’s total fee income. The…arrow_forward
- For each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFACs Code of Ethics for Professional Accountants and the rationale for the applicable guideline. a.Paul Asante, CPA, discloses confidential information in a peer review of the firms quality control procedures. b.Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks. b.Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work.arrow_forwardYou are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the audits of the following four independent entities for the year ended 30 June 2018:(a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances (b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties…arrow_forwardYou are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the audits of the following four independent entities for the year ended 30 June 2018:(a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances(b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is…arrow_forward
- The audit partner has just advised you that he has been approached to accept the appointment of auditor to Games Limited. Games Limited is a manufacturer of gaming machines and has been named in a recent anti-corruption inquiry as having offered incentives to state government members to support a proposed bill which would allow an increased number of gaming machines in licensed premises. No charges have yet been laid against Games Limited or any of its employees. The audit partner explains to you that Games Limited’s auditors were re-appointed for the current financial year at the Annual General Meeting held two months ago. However, Games Limited’s managing director is unhappy with the existing auditing firm as the audit partner assigned to Games Limited has been changed. Required: The audit partner is unsure whether he should accept the appointment and has asked you to outline any ethical, legal and other factors to be considered in his decision about whether to accept the…arrow_forwardSandoval Research is required to file its audited financial statements with the Government Accountability Office. Cain & Scutaro, CPAs has been hired to perform the engagement for the year ending December 31, 20x7. Cain & Scutaro has identified several threats to its independence with respect to Sandoval. which of the following potential safeguards might be effective in reducing threats to an acceptable level? a. Consulting with an independent third party. b. Having a professional staff member who was a member of the audit team review the work performed. c. Having a professional staff member who was a member of the audit team review the work performed .d. Allowing a member of the audit tem to have aarrow_forwardThe board of directors of Danson Company limited asked Jameel & Soften, a Private Auditing Firm to audit Danson’s financial statements for the year ended 31st December 2019. Jameel & Soften explained the need to make an enquiry of the predecessor auditor and requested permission to do so. Danson’s board of directors refused to honor the request on the grounds that relations with the predecessor had deteriorated so significantly that Jameel & Soften would receive biased and defamatory information from the predecessor.Requireda. What is the purpose of the communication between the successor and the predecessor auditor?b. How does communication aid in assessing audit risk?c. What position should Jameel & Soften assume in the present situation? How should they respond to Danson’s refusal to permit communication with the predecessor auditor?arrow_forward
- You are an audit senior of Beckham & Co and have been allocated to the audit of Willian Co (Willian), a listed company which has been an audit client for eight years and specializes in manufacturing musical instruments. Spice Posh was the audit engagement partner for Willian and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, Shakira Pique, has suggested that in order to maintain a close relationship with Willian, Spice should undertake the roleof independent review partner this year. In addition, Willian has requested that Spice assist them by attending their audit committee meetings, as a non-executive director has recently left the company. Willian has also asked Shakira and the other partners at Beckham & Co to help them in recruiting a new non-executive director. The total fees received by Beckham & Co for last year equated to 16% of the firm’s total fee income. The…arrow_forwardJulia is a CPA employed by Super Great Value (SGV) and Co. Cecilia is a partner, and her cluster is engaged in an audit of the financial statements of Jellybean Fruits Corporation (JFC). During the preliminary conference with JFC's audit committee, one of the committee members made the following suggestions to Ms. Julia:That last year's audit was finished by SGV on time, but JFC is requesting for a shorter audit period this year.That last year's audit work be divided among more team members this year. Last year's audit involved three audit associates. For this year, four members should be included. JFC is willing to pay for any additional costs it may entail.That one associate should be working auditing current assets and current liabilities; another associate should focus on property and equipment and non-current liabilities; another associate should focus on the minutes of the board's meetings and the shareholders' equity accounts; and the last associate will audit the income and…arrow_forwardThe audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2019. However, Rick Carlson was uncertain whether it could happen. As the review partner, he had just completed going over the work paper files of the senior auditor in charge of the engagement, Grace Sloan, and had way too many questions to wrap things up by the end of the week. Rick called Grace into his office and asked her about some questionable judgments she had made. He hoped her explanations would be satisfactory and he could move on with completing the audit. Why did you approve the accounting for new acquisitions of plant and equipment that were not supported by adequate underlying documentation? Why did you accept the client’s determinations of accrued expenses rather than make your own independent judgments? How can you justify relying on last year’s work papers to determine the proper allowance for uncollectibles one year later? To say Grace was stressed out would be an…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub