ACC 421 CH. 10 EXAM WITH COMPLETE SOLUTIONS
1. A CPA has multiple office locations. In evaluating whether a CPA firm satisfies the
independence rules with regard to an audit client, the concept of a "covered member"
includes:
a. An administrative assistant who assists the principal partner in charge of the audit
b. A second audit partner who provides a concurring opinion on an audit and is located in a
different office from the partner in charge of the audit
c. An audit partner who works in a different office from the partner in charge of the audit and
does not influence a particular audit
d. An information systems partner who spent four hours on a consulting project for an audit
client - ANSWER b
2. In applying independence rules, the concept of a "covered member" on an audit applies to:
a. Only the principal audit partner on an audit
b. Only the principal audit partner and the concurring partner, if any, on an audit
c. Only the principal audit partner, the concurring audit partner, and senior staff exercising
managerial responsibilities on an audit
d. All accounting professionals who provide audit services to an audit client - ANSWER d
3. Can a tax partner in a CPA firm with multiple offices be a "covered member" on an audit?
a. Yes, but only if the partner renders more than 10 hours of tax services to an audit client
b. Yes, if the tax partner works out of the same office as the audit partner in charge, even if
, she does not render any services to the audit client
c. Yes, all partners in a CPA firm automatically are "covered members," even if they do not
work out of the same office as the audit partner or render any services to the audit client
d. No, tax partners are not subject to the independence rules - ANSWER b
4. According to the AICPA's Code of Professional Conduct, if a CPA renders more than ten
hours of nonaudit services to an audit client, the CPA :
a. Automatically is a covered member on the audit
b. Automatically prevents the CPA firm from satisfying the independence requirement under
all circumstances
c. Automatically prevents the CPA firm from satisfying the independence requirement if the
CPA is a partner in the CPA firm performing the audit
d. Automatically prevents the CPA firm from satisfying the independence requirement if the
CPA has a friend who works in the compilation, processing, or presentation of the audit
client's financial statements - ANSWER a
5. In accordance with the Independence Rule, an ownership interest in an audit client is
considered to be an indirect interest if:
a. An auditor benefits from it, but cannot meaningfully influence or control it
b. A partnership of which the auditor is a member owns the interest
c. The benefits from the interest have accrued in the form of price appreciation but realization
of this appreciation has not occurred
d. An immediate family member owns the interest and shares the financial benefits of the
interest with the auditor - ANSWER a
1. A CPA has multiple office locations. In evaluating whether a CPA firm satisfies the
independence rules with regard to an audit client, the concept of a "covered member"
includes:
a. An administrative assistant who assists the principal partner in charge of the audit
b. A second audit partner who provides a concurring opinion on an audit and is located in a
different office from the partner in charge of the audit
c. An audit partner who works in a different office from the partner in charge of the audit and
does not influence a particular audit
d. An information systems partner who spent four hours on a consulting project for an audit
client - ANSWER b
2. In applying independence rules, the concept of a "covered member" on an audit applies to:
a. Only the principal audit partner on an audit
b. Only the principal audit partner and the concurring partner, if any, on an audit
c. Only the principal audit partner, the concurring audit partner, and senior staff exercising
managerial responsibilities on an audit
d. All accounting professionals who provide audit services to an audit client - ANSWER d
3. Can a tax partner in a CPA firm with multiple offices be a "covered member" on an audit?
a. Yes, but only if the partner renders more than 10 hours of tax services to an audit client
b. Yes, if the tax partner works out of the same office as the audit partner in charge, even if
, she does not render any services to the audit client
c. Yes, all partners in a CPA firm automatically are "covered members," even if they do not
work out of the same office as the audit partner or render any services to the audit client
d. No, tax partners are not subject to the independence rules - ANSWER b
4. According to the AICPA's Code of Professional Conduct, if a CPA renders more than ten
hours of nonaudit services to an audit client, the CPA :
a. Automatically is a covered member on the audit
b. Automatically prevents the CPA firm from satisfying the independence requirement under
all circumstances
c. Automatically prevents the CPA firm from satisfying the independence requirement if the
CPA is a partner in the CPA firm performing the audit
d. Automatically prevents the CPA firm from satisfying the independence requirement if the
CPA has a friend who works in the compilation, processing, or presentation of the audit
client's financial statements - ANSWER a
5. In accordance with the Independence Rule, an ownership interest in an audit client is
considered to be an indirect interest if:
a. An auditor benefits from it, but cannot meaningfully influence or control it
b. A partnership of which the auditor is a member owns the interest
c. The benefits from the interest have accrued in the form of price appreciation but realization
of this appreciation has not occurred
d. An immediate family member owns the interest and shares the financial benefits of the
interest with the auditor - ANSWER a
