Spouses and dependent persons.1. A partner's dependent parent is a-5% limited partner in a firm client. Does the parent's direct financial interest in the client impair im·pair tr.v. im·paired, im·pair·ing, im·pairs To cause to diminish, as in strength, value, or quality: an injury that impaired my hearing; a severe storm impairing communications. the firm's independence? [] Yes [] No 2. An individual participating in a review engagement who holds a nonmanagerial position in the firm has a dependent daughter who owns 10 shares of client stock. Does the financial relationship impair the firm's independence? [] Yes [] No 3. If the individual in question 2 above occupies a managerial position in the firm, is the firm's independence impaired if he or she does not participate in the engagement? [] Yes [] No 4. A member's spouse owns shares of stock in a mutual fund that holds shares of stock in an audit client. The investment is material to the spouse. Is the firm's independence impaired if the member is a proprietor proprietor n. the owner of anything, but particularly the owner of a business operated by that individual. PROPRIETOR. The owner. (q.v.) , partner or shareholder or is an individual in a managerial position located in an office participating in a significant portion of the engagement or one participating in the engagement? [] Yes [] No 5. An individual with a managerial position is married to a member of an audit client's board of directors. Is the firm's independence impaired if the managerial employee participates in the engagement? [] Yes [] No 6. A shareholder assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to a firm's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of office is married to the president of a client for which the firm's Connecticut office performs audit services. If the shareholder does not perform services out of or for the Connecticut office, cannot exercise significant influence over the engagement and has no involvement with the engagement, such as consulting on accounting or auditing issues, is the firm's independence impaired? [] Yes [] No 7. A partner assigned to a review engagement has a dependent daughter who is employed by the client as a machine operator--a non-audit-sensitive position. Is the firm's independence impaired? [] Yes [] No 8. If the daughter was employed as the inventory warehouse supervisor--an audit-sensitive position--would the firm's independence be immpaired? [] Yes [] No OTHER RELATIVES 9. A firm audits a condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. association in which a member's parents own a unit. Is the firm's independence impaired if the unit is material to the parents' met worth and the member participates in the engagement? [] Yes [] No 10. A managerial employee's father retired from his position as a review client's chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . On his retirement, he acquired a 10% interest in the client, which is material to his net worth. If the managerial employee participates. In the review engagement, is the firm's independence impaired? [] Yes [] No 11. An individual with a managerial position has a brother who owns a 60% interest in an audit client, which is material to the brother's net worth. If the managerial employee participates in the audit engagement, is the firm's independence impaired? [] Yes [] No 12. Assuming the same facts as in question 11, if the 60% interest in the client is not material to the brother's net worth and the managerial employee does not participate in the audit engagement, is the firm's independence impaired? [] Yes [] No 13. A shareholder's mother is the general partner of a limited partnership for which review services are performed. If the, shareholder is located in an office participating in a significant portion of the engagement, is the firm's independence impaired? [] Yes [] No ANSWERS 1. Yes. 2. Yes. 3. Yes. 4. Yes. 5. Yes. 6. No. 7. No. 8. Yes. 9. Yes. 10. Yes. 11. Yes. 12. No. 13. Yes. This quiz A quiz is a form of game or mind sport in which the players (as individuals or in teams) attempt to answer questions correctly. Quizzes are also brief assessments used in education and similar fields to measure growth in knowledge, abilities, and/or skills. is based on American Institute of CPAs professional ethics professional ethics, n the rules governing the conduct, transactions, and relationships within a profession and among its publics. professional ethics liability, n 1. division staff interpretations of Rule 101 as it relates to independence and family relationships. It i8 not a pronouncement of the professional ethics executive committee nor does it purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to set forth an official position of the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). . In addition, this quiz does not address the requirements of the SEC practice section of the AICPA division for CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. firms or of regulatory bodies, such as the state boards state boards Examinations administered by a US state board of medical examiners to license a physician in a particular state; these examinations play an ever-decreasing role in state medical licensure, as these bodies now rely on standardized national examinations of accountancy and the Securities and Exchange Commission, whose positions may differ from those of the AICPA. Edited by SUSAN S. COFFE Y, CPA, technical manager, in the AICPA professional ethics division. |
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