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. A two-office firm, one in Chippewa Falls and another in Fargo, has an audit client that sells medical equipment. The lead audit partner for this client conducts the engagement in the Fargo office. Stockholdings in the client by which of the following persons would not impair the firm’s independence? a. A manager in Chippewa Falls who will provide 26 hours of non-attest services to the client this year. b. A Chippewa Falls staff person who provides no services to the client. c. A tax partner in the Fargo office who provides no services to the client. d. A Fargo staff person working on the audit engagement.

Sagot :

The right response to this question is (b) A member of the Chippewa Falls staff who doesn't offer the client any services.

An auditor, an audit company, and all members who are covered by Rule 100 of Ethics are required to uphold objectivity, independence, and integrity both before and during the audit.

In our example, A client of an accounting firm with two locations—one in Chippewa Falls and one in Fargo—sells medical equipment.

The engagement is managed by the client's lead audit partner in the Fargo office. Thus, Stock holdings by a Chippewa Falls employee who doesn't provide the client with any services would not compromise the independence of the firm.

The audit requires complete independence from all partners, supervisors, and employees working directly on it.

All partners of a CPA firm who have the power to affect the client's audit process are considered covered members.

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