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 a material investment in the capital stock of Hardin. She does not participate in the engagement.Shelly, a staff assistant in the QC office, works on the Hardin audit. Her uncle works as the chief accounting officer of Hardin.Bill, a senior in the QC office, does not work on the Hardin audit, but owns 9% of Hardin’s outstanding equity.

Auditing is a process of reviewing of financial statements of a corporation by an insider or…

Answered: The firm of Bulaklak and Bubuyog, CPAs,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 a material investment in the capital stock of Hardin. She does not participate in the engagement.
Shelly, a staff assistant in the QC office, works on the Hardin audit. Her uncle works as the chief accounting officer of Hardin.
Bill, a senior in the QC office, does not work on the Hardin audit, but owns 9% of Hardin’s outstanding equity.

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