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WEEK 2 HOMEWORK (ACCT 555: EXTERNAL AUDITING)The following questions concern auditor independence; Choose the best responsea. What is the meaning of the rule that requires the auditor be independent?1The auditor must be without bias with respect to the client under audit2The auditor must adopt a critical attitude during the audit3The auditor's sole obligation is to third parties4The auditor may have a direct ownership interest in the client's business if it is not materialb. Which of the following services can be offered to public company audit clients under SEC requirements and the Sarbanes–Oxley Act?1Tax services for executives involved in financial reporting2Internal audit outsourcing3Tax planning not involving tax shelters4Bookkeeping and other accounting servicesc. An auditor strives to achieve independence in appearance to1comply with the auditing standards related to audit performance2become independent in fact3maintain public confidence in the profession4maintain an unbiased mental attitudeThe following questions concern possible violations of the AICPA Code of Professional Conduct. Choose the best responsea. In which one of the following situations would a CPA be in violation of the AICPA Code of Professional Conductin determining the audit fee? 1A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan2A fee based on the outcome of a bankruptcy proceeding3A fee based on the nature of the service rendered and the CPA's expertise instead of the actual time spent on the engagement4A fee based on the fee charged by the prior auditorb. The AICPA Code of Professional Conductstates that a CPA shall not disclose any confidential client information obtained in the course of a professional engagement except with the consent of the client; In which one of the following situations would disclosure by a CPA be in violation of the Code?1Disclosing confidential information to another accountant interested in purchasing the CPA'spractice2Disclosing confidential information in compliance with a subpoena issued by a court3Disclosing confidential information in order to properly discharge the CPA's responsibilities in accordance with the profession's standards4Disclosing confidential information during an AICPA-authorized peer reviewc. A CPA's retention of client records as a means of enforcing payment of an overdue audit fee is an action that is1not addressed by the AICPA Code of Professional Conduct2acceptable if sanctioned by the state laws3prohibited under the AICPA rules of conduct4a violation of generally accepted auditing standards
The following situations involve the provision of nonaudit services. Indicate whether providing the service is a violation of AICPA rules or SEC rules including Sarbanes-Oxley requirements onindependenceViolation?SituationYesa.Providing bookkeeping services to a public company. The services were preapproved by the audit committee of the company.