cpa audit review ch 2 review 3

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Author:
Joens1313
ID:
278748
Filename:
cpa audit review ch 2 review 3
Updated:
2014-07-13 00:48:37
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cpa audit review
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cpa audit review ch 2 review 3
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  1. Is the following impaired or not impaired?

    Sam is on an engagement team that procides attest services to Many Stock Mutual Fund.  Sams wife owns 300 shares of Many Stock Mutual Fund
    Impaired --- The financial interest of a spouse are attributed tot he covered member.  Sam is a covered member and independence is impaired if a covered member has a direct financial interest in a client.
  2. Is the following impaired or not impaired?

    Staci can influence the attest engagement of Perfect Plastics.  Stacis husband owns a few shares of a mutual fund that happens to hold some shares of perfect Plastics
    Not Impaired ---- Independence is impaired if a covered member ( or spouse of a covered member) has a material indirect financial interest in a client.  However a covered member ( or spouse) may own shares in a mutual fund that holds shares of a client as long as the mutual fund investment is not material to the member.
  3. Is the following impaired or not impaired?

    Jack is the lead engagement partner on the audit for a new client, Amber Relics.  Joseph another partner who works in the same office as Jack was employed by Amber Relics 2 years ago.
    May be impaired --- Joseph is a covered member and independence may be impaired if a covered member was formerly employed by the client.  Joseph must be completely disassociated with Amber Relics to be independent.
  4. Is the following impaired or not impaired?

    Susan is on the engagement team for audit of Skiddleywinks.  Susan has significant investment in Poppers, Inc.  and during the audit, Susan discovered that Skiddleywinks had an immaterial investment in Poppers.
    Impaired ---- Independence is impaired if a covered member has certain financial interest in non clients having investor or investee relationships with the client.  If a covered member has a material financial interest and a client investor has an immaterial investment in the same non-client investee, independence in impaired.
  5. Is the following impaired or not impaired?

    After Professional CPAs performed attest services for Business Corp., Professional CPAs sued Business Corp because Business Corp did not pay their bill.
    Not Impaired ----- Independence is not impaired when the litigation issue is not related to the work product and is not material for example a dispute over a bill.

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