Principles of Auditing & Other Assurance Services (Irwin Accounting)
20th Edition
ISBN: 9780077729141
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Question
Chapter 3, Problem 28QRA
To determine
Explain whether the threat can impair the independence of Mr. R.
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Roger Royce, CPA, has encountered a situation that he thinks may pose a threat to his independence with respect to Watson, Incorporated an audit client. The situation is not addressed by an independence rule or regulation. Using the AICPA Conceptual Framework for Independence Standards, describe how Royce can determine whether the threat truly impairs his independence.
Do you believe that the SEC should prohibit auditors from providing all nonaudit services for audit clients? Use ethical reasoning to support your answer.
AICPA independence requirements suggest that a CPA should evaluate whether a particular threat to independence would lead a reasonable person, aware of all the relevant facts, to conclude that:
a
A questioning mind reveals doubt as to independence.
b
An unacceptable risk of non-independence exists.
c
The accountant is definitely not independent.
d
There is substantial cause for a legal finding of non-independence.
Chapter 3 Solutions
Principles of Auditing & Other Assurance Services (Irwin Accounting)
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. 47ITCCh. 3 - Prob. 48ITCCh. 3 - Prob. 49RDC
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Similar questions
- Auditor’s failure to exercise sufficient care and skill in carrying out their audit might lead to legal action by those who claim to rely on the work of the auditor (Che-Ahmad et. Al., 2018). Discuss THREE (3) safeguards by auditors that could help minimize the risk of legal liability.arrow_forwardAuditors are required to assess any ethical threats before accepting clients and must either reject the appointment or mitigate the threats through measures put in place.Explain in detail these ethical threats and what appropriate measures that can be put in place to mitigate these threats.arrow_forwardSome criticize the accounting profession for using expressions in the audit report that seem to be building in deniability should the client commit a fraudulent act. What expressions enable the CPA to build a defense should the audit wind up in the courtroom? Do you see anything wrong with these expressions from an ethical point of view?arrow_forward
- When applying the GAO's conceptual framework (framework), which step should the auditor apply first? Evaluate the threat to independence. Apply safeguards to mitigate threats to independence. Determine whether use of the framework is required. Identify the threat to independence. When applying the GAD's conceptual framework (framework), which step should the auditor apply first? Evaluate the threat to independence O Apply safeguards to mitigate threats to independence O Determine whether use of the framework is required. O Identify the threat to independencearrow_forwardA CPA wishes to use representation letter as a substitute for performing other audit procedures. Doing so: Violates professional standards, Is acceptable, but should only be done when cost justified, Is acceptable, but only for non-public clients, Is acceptable and desirable under all conditionsarrow_forwardWhich of the following statements is true regarding the AICPA Code of Conduct's conceptual framework approach? An auditor who identifies threats should discontinue the engagement. Olf safeguards reduce threats to an acceptable level, the auditor should discontinue the engagement. OAfter threats are identified, an auditor should apply safeguards to determine whether the threat can be reduced to an acceptable level. OAn auditor who identifies threats that are significant should discontinue the engagement.arrow_forward
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