Homework Solutions - Auditing Chapter 4 Homework Solutions...

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Auditing Chapter 4 Homework Solutions Multiple Choice Questions 4-18 a. (1) b. (3) c. (1) 4-19 a. (1) b. (3) c. (3) 4-21 a. Rule 101 - Independence. No violation. John Brown is not a partner nor is he assigned to the engagement team for the audit client. b. Rules. – Rule 201 - General Standards. Violation. Interpretation 201-1 states that a member who accepts a professional engagement implies that he or she has the necessary competence to complete the engagement according to professional standards. Bacon has violated the rule since he does not have the expertise to review the work of the consultant hired by Bacon. Bacon should have suggested that the company hire the consultant directly. c. Rule 102 - Integrity and Objectivity. Violation. This rule states that in tax practice, a member may resolve doubt in favor of his or her client as long as there is reasonable support for his or her position. In the example case, the client has provided no support for the unusual deductions. Phyllis Allen has violated Rule 102 by not requiring reasonable support for the deductions. d. Rules 101 (Independence) and 102 (Integrity and Objectivity). Violation. Bill Wendal’s agency’s financial dealing has impaired the appearance of independence with his audit clients and participation in a business, which impairs his objectivity. It is also a conflict of duties to recommend his own firm to review the adequacy of the existing insurance coverage of existing clients.
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e. Rule 301 - Confidential Client Information. Violation. The client should have been notified that the review was to take place, and an attempt made to obtain the client's permission for such review because the review was not a part of an AICPA, state CPA society or Board of Accountancy review program. The firms violated Rule 301 by not obtaining consent from the client for the review. f.
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Homework Solutions - Auditing Chapter 4 Homework Solutions...

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