CP 1-6 - be taken into consideration The performance of ATT...

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Karen Zhu ACCT 151 Bayak 1/23/12 CP 1-6 1. I think Jack Jones is still maintaining independence. Since he is a partner of a large audit firm, and only owns 10 shares of Ford stock, the incentive to manipulate the audits of Ford is very small. Jack Jones would risk losing much more than he would possibly be gaining in this situation. 2. Melissa Chee is still maintaining appropriate independence. Her investment in the mutual fund company does benefit her when Sears is doing well, but does not make a huge impact. There are a variety of other factors and stocks that determine her return on her investment, so the probability that she would consider altering her audit is small. 3. I think there is a problem with Bob Franklin and his independence from the entity. I think 50,000 shares of stock is significant enough for the fact that Franklin is conducting the audit to
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Unformatted text preview: be taken into consideration. The performance of ATT would have a considerable impact on the return Franklin would receive. 4. There is not enough independence between Nancy Sodama and her audit. Since she is a close friend to the owner and former employee of the small business, she has a close tie to the audit and incentive to manipulate the audit report. Her past and current associations with this small business are not independent enough for her to be able to audit the company. 5. I think there is enough independence between Mark Jacobs and the First City audit. Since he is only borrowing the mortgage loan on normal terms, the fact that he has been assigned to audit the company should not really matter. It would be unnecessary for the company conducting the audit to prohibit anyone with a loan or association to First City from working on the audit....
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This note was uploaded on 02/09/2012 for the course ACCT 151 taught by Professor Brown during the Spring '11 term at Cuyahoga CC.

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