ACC 333 Final Exam [Questions from Discussion Boards]

ACC 333 Final Exam [Questions from Discussion Boards] For which clients must a CPA be independent? - Independence is required for only those who perform attest services. CPAs in the private sector cannot e independent. Why is independence so important for a CPA? - If a CPA is not independent there is a higher likelihood for bias in the audit whether intentional or not. Also, if a CPA appears not to be independent, the public will lose confidence in the CPA and the profession will be less able to add credibility to financial statements. in this case, the profession is less able to do their job. What are the steps of applying the conceptual framework on independence? - According to the AICPA, the steps of applying the conceptual framework of independence are as follows: 1. Identify the potential threats 2. Evaluate the significance of the threats identified 3. Identify safeguards against the threats identified 4. Evaluate whether or not these safeguards remove the threats or put the threats at an acceptable level What is independence in fact? Could you own significant shares in a client and be independent in fact? - Independence in fact is defined by the book as "actual commitment to objectivity and professional skepticism." Owning significant shares in a client, in turn, means that you have significant influence over the client. While owning these stocks affects independence in appearance more, it would not be impossible to be independent in fact but very difficult to actually be and prove you are. What is independence in appearance? - Independence in appearance is one of the two requirements to maintain independence auditors must be. Meaning in surrounding circumstances should not give an informed observer any reason to doubt a auditor's objectivity, integrity, and professional skepticism. Who are covered members who must be independent? - Covered members are accounting professionals who are subject to the full range of independence requirements. This group is divided into five groups of accountants: 1. Accounting professionals who serve on attest engagement teams - this includes all direct participants in an attest engagement including a partner who provides a concurring second opinion. 2. Accounting professionals who are in a position to influence an attest engagement - This could include senior firm members and their superiors who oversee quality control. 3. Partners and senior accounting staff members who provide at least 10 hours annually of non-attest services such as tax or consulting services to an attest client. 4. All partners who work in the same office as the lead attest engagement partner.