A two-office firm, one in chippewa falls and another in fargo, has an audit client that sells medical equipment. The lead audit partner for this client conducts the engagement in the fargo office. Stockholdings in the client by which person would not impair the firm's independence under the aicpa code?
Answers
Complete question:
A two-office firm, one in Chippewa Falls and another in Fargo, has an audit client that sells medical equipment. The lead audit partner for this client conducts the engagement in the Fargo office. Stock holdings in the client by which of the following persons would not impair the firm's independence?
a. A manager in Chippewa Falls who will provide 26 hours of non-attest services to the client this year.
b. A Chippewa Falls staff person who provides no services to the client.
c. A tax partner in the Fargo office who provides no services to the client.
d. A Fargo staff person working on the audit engagement.
Answer:
A Chippewa Falls staff person who provides no services to the client.
Explanation:
Independence means freedom of mind and freedom of presence within the sense of an audit. Every audit engagement team leader must also be autonomous. For other audit company Members known as protected Members, the freedom requirement is valid.
Law 100 of Ethics allows an inspector, audit agency, and other interested participants at all point before and after the audit, to preserve confidentiality, honesty and objectivity. Both directly interested partners, administrators and personnel in the audit will be at both times separate. A participant protected covers all audit company members who may affect the client's audit process. It requires all supervisors who do not work for the same customer for ten or more hours.
Personnel from another auditing company office who have no impact on the audit agreement are not protected and are not affected by independence.
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