007 - QUESTION 2(30 marks.You are the partner in a public...

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Unformatted text preview: QUESTION 2 (30 marks) ' ' .You are the partner in a public accounting firm who is responsible 1. You become aware that Jim Jones, a partner in the firm‘for -—w' many years, is a close friend of the owner-manager of PQR Inc an audit client. They play golf often and their families ofte socialize. ’ 2. The firm has been offered alreview engagement for XTU Inc. a company that is 40% owned by the daughter of one of your partners. She resides with her parents. __ WWI/W mym. 3. An audit client, VWX Inc. is a public company wit ,a market capitalization of sngillion. Your firm has been asked to help management with actuarial services for their negotiations \a with the union regarding employee benefits. The current union W contract expires on December 31, 2006. ¥ 339 ® About five years ago, the {audit partner), Joan Johnson attended a meeting with the bankers of (XZAB) Inc‘. to discuss (increase) K . the company’s credit facilities. The owner-manager, Tom 134 Jenkins has already advised Ms. Johnson that-a meeting is y scheduled for December 20, 2006.’ Since he was very satisfied with her performance at the previous meeting, he has requested W / (3" that she attend and conduct most of the negotiations with the 'wfldy' bank . \fi W 5. The management of an audit client, XZ Inc. has asked the firm to research an important income tax issue and advise on a suitable course of action. The main issue pertains to the amount of income tax owing as a result of a particular (material transactionl F E ! B'r-Gn dodger UJLCA (OAJUC/Ll'nfl an add/’1' is " éuPose, 7L» [flow/t an- ObJICC/LI‘Uev Skit me’lnd) and {3 SulfOS-Z 7L0 Comjod- Jig agar—L gnu/L] s 3704 Some rtélfim rhic with 7”“ ”W’MQF IS 6: C/Iof Mica.) .Lo z'nC/szJe/wc. 8Q(\M'G;MJS‘ ,{g} Quad/d 31 ego/JFSC his aE5CgJ—CVP‘I7J an J @(efiessfo/Lol 5 IQKPL’S'M, M {Emu 1W 1']. fl' ‘3 MMJ‘ "(Wmmlzwq I?” 0/14”" ...
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