The Code of professional Conduct, independence rule, does not consider which of the followingcircumstances to be a lack of independence? 1. The CPA firm's sole audit managerserved as a controller of the audit client from January Year 1  through to May Year 6 when the manager began working with the CPA firm. The current audit period for this client is from April 1, Year 6 through to March 31, Year 7. 2. The auditor's brother-in-law's father is the controller of the client being audited. 3. The auditor provides valuationand appraisal services to a client, the results of which are material to the client's financial statements. 4. A financial institution client loans the auditor money to buy a car but does notcollateralize the loan.

For Questions 21 through 30, assume that you are reporting on an audit of a client’s financial statements.  Select the type(s) of opinion appropriate for the scenario.  In addition, unless stated otherwise, assume the matter involved is material.  If the problem does not tell you whether a misstatement pervasively misstates the financial statements or does not list a characteristic that indicates pervasiveness, two reports may be possible.   A company has not followed generally accepted accounting principles in the recording of its leases.   Question 21 options:   Qualified   Adverse   Disclaimer   Qualified or adverse         A client changed its depreciation method for production equipment from the straight-line method to the units-of-production method based on hours of utilization.  The auditor concurs with the change.   Question 22 options:   Unmodified – standard   Unmodified with…

At the closing meeting, a representative of the top management of the auditeeorganisation informs the auditor that they have now implemented a processto correct a serious nonconformity that the auditor found on the first day of atwo-day Stage 2 audit. The representative of top management proposes thatthe auditor examine the process during the meeting and then withdraw thenonconformity report. How should the auditor respond?

As of the end of the fiscal period under audit, the auditor will request a special kind of confirmation, or written representation, from the client's attorneyls). This representation is commonly referred to as OA a lawyer's letter. OB an attorney's representation letter. OC neither of the preceding OD. both of the preceding

S1: Most of the audit procedures in examining the financial statement components are performed by the junior or associate auditors. S2: At the completion stage, the reviewer of working papers should check if the approved adjusting journal entries have been properly posted and the amounts in the working trial balance agree with the amounts shown in the lead schedules.    a. BOTH STATEMENTS ARE TRUE b. BOTH STATEMENTS ARE FALSE c. ONLY S1 IS TRUE d. ONLY S2 IS TRUE

The standard unqualified opinion based on the audit of a public company's financial statements includes a. A discussion of Key Audit Matters if KAMs are discovered. b. A reference to Key Audit Matters if no KAMs are discovered. c. A statement that the CPA firm is registered with the AICPA. d. An indication of how long the firm has served as the company's auditors. e. A Basis for Opinion section preceding the Opinion of Financial Statements section.

Controller as Auditor. The chairman of the board of Hughes Corporation proposed that the board hire as controller a CPA who had been the manager of the team that conducted Hughes Corporation’s audit engagement. The chairman thought that hiring this person would make the annual audit unnecessary and would consequently result in saving theprofessional fee paid to the auditors. The chairman proposed to give this new controller a full staff to conduct such investigations of accounting and operating data as necessary.Evaluate this proposal.

General and Technical Rule Cases. Read the following cases. For each, state whether the action or situation shows a violation of the AICPA Code of Professional Conduct; if so, explain why and cite the relevant rule.a. CPA Jerry Cheese became the new auditor for Python Insurance Company. Cheese knew a great deal about insurance accounting but had never conducted an audit of an insurance company. Consequently, Cheese hired CPA Tate Gilliam, who had six years of experience with the State Department of Insurance Audit. Gilliam managed the audit, and Cheese was the partner in charge. b. CPA Mackenzie Palin practices public accounting and is a director of Comedy Company. Palin’s firm performs consulting and tax services for Comedy. Palin prepared unaudited financial statements on Comedy’s letterhead and submitted them to First National Bank in support of a loan application. Palin’s accounting firm received a fee for this service.c. CPA Ellery Idle audited the financial statements of Monty…

Each of the following statements is a communication from management. Indicate whether the inclusion of each statement in written representations is appropriate. Provide your rationale for any statements whose inclusion in written representations is not appropriate.a. “Certain representations in this letter are described as being limited to matters that are material.”b. “No frauds involving management, employees who have significant roles in internal control, or other frauds that could have a material effect on the financial statements have occurred during the year under audit.”c. “Based on our assessment, we conclude that the Company has maintained an effective internal control over financial reporting as of December 31, 2017.” d. “We have prepared a description and evaluation of certain contingencies for which our attorneys have devoted substantive attention on our behalf in the form of legal representation.”e. “There are no significant deficiencies, including material weaknesses, in…

Which of the following is NOT a reason the auditor performs some substantive procedures at an interim audit date? O increase the effectiveness of the overall audit O client may require it for reporting purposes O allow the audit firm to decrease the amount of work during their 'busy season' O increases the efficiency of the year-end audit