CPA- AUD- Module 1 || with complete solution.
Current Employment correct answers Partners of professional employees (POPE) of attest firms
cannot work for attest clients.
Professors (POPEs) correct answers Popes may serve as professors at an educational institution
that is an attest client if these safeguards apply:
-Does not hold key position with client
-is not on attest team
-is not a PTI
-is on a part-time and non-tenure basis
-does not participate in any employee benefit plan sponsored by the school, unless participation
is required
- does not assumed any management responsibilities or set policies
Honorary Director or Trustee of a NFP (POPEs) correct answers POPEs may lend the prestige of
their names to a NFP organization that is an attest client if:
- the position is honorary
- the POPE cannot vote and takes no management role in the organization, and
-all externally circulated materials identify the position as honorary
Campaign Treasurer (POPEs) correct answers As a campaign manager for a political campaign
- cannot audit the campaign
-cannot audit the governmental unit which the candidate will head if successful
-can audit the political party of the candidate
Member of Federated Fund-Raising Organization (POPEs) correct answers If POPE serves as
director or officer of the organization
,-if the organization also control the charity: cannot audit
-if the organization does not control: apply the conceptual framework
Dissociate: 5 Steps correct answers 1. ceasing to participate in all employee health and welfare
benefit plans sponsored by the attest client, unless the client is legally required to allow the
covered member to participate in the plan, and the covered member pays 100% of his or her
portion of cost
2. ceasing to participate in all other employee benefit plans by liquidating or transferring all
vested benefits in the client's defined benefit plans, defined contribution plans and similar
arrangements at the earliest date permitted under the plan
3. disposing of any direct or material indirect financial interest in the client
4. collecting or repaying any loans to/from the client other than those specifically permitted or
grandfathered by the code
5. assessing other relationships with the client to determine if they create threats to independence
that would require the application of safeguards to reduce threats to an acceptable level
Future employment with an attest client correct answers When an attest team member or PTI is
considering employment with the attest client, independence is impaired unless the team
member:
- reports the offer to the firm
- removes themselves from the engagement until the offer is rejected or we don't want the
position anymore
When you learn of another team member doing this you must report it.
Taking a job with an attest client correct answers A firms independence is impaired when a
partner or POPE goes to work for an attest client in a key position unless all conditions are met:
-amount due to the employee remain fixed during payout period.
-former employee cannot influence the accounting firm's operations/financial policies
, - former employee doesn't participate in the firms business and isn't associated with the firm.
Appearance or participation results from actions such as:
1. individual provides consultation for firm
2. firm provides individual with an office and related amenities
3. their name is on the firms office directory
4. their name is included as member of the firm in other membership lists of business,
professional, or civic organizations, unless the individual is clearly designated as retired
How long is the cooling period under SOX? correct answers 1 year preceding the beginning of
the audit.
If a covered member belongs to a social club that is an attest client is their an independence
problem? correct answers There is no independence problem if the membership is primarily a
social matter
If a covered member is a member of a trade association is independence impaired? correct
answers Yes if the trade association is an attest client or a POPE of a firm is employed by or
associated with a trade association in an important role.
What are the four safeguards if a CM is a member of a common interest realty association
(CIRA)? correct answers 1. CIRA performs functions similar to local governments
2. CM annual assessment is not material to either CIRA or CM
3. Liquidation of CIRA or sale of common assets would not result in distribution of covered
member
4. CIRAs creditors would not have legal recourse to CM assets if CIRA become insolvent
Does being a member of a credit union cause independence problems? correct answers Yes, if the
CM is only eligible to join because of provision of professional services.
No, if CM is eligible because of individual qualifications.
Current Employment correct answers Partners of professional employees (POPE) of attest firms
cannot work for attest clients.
Professors (POPEs) correct answers Popes may serve as professors at an educational institution
that is an attest client if these safeguards apply:
-Does not hold key position with client
-is not on attest team
-is not a PTI
-is on a part-time and non-tenure basis
-does not participate in any employee benefit plan sponsored by the school, unless participation
is required
- does not assumed any management responsibilities or set policies
Honorary Director or Trustee of a NFP (POPEs) correct answers POPEs may lend the prestige of
their names to a NFP organization that is an attest client if:
- the position is honorary
- the POPE cannot vote and takes no management role in the organization, and
-all externally circulated materials identify the position as honorary
Campaign Treasurer (POPEs) correct answers As a campaign manager for a political campaign
- cannot audit the campaign
-cannot audit the governmental unit which the candidate will head if successful
-can audit the political party of the candidate
Member of Federated Fund-Raising Organization (POPEs) correct answers If POPE serves as
director or officer of the organization
,-if the organization also control the charity: cannot audit
-if the organization does not control: apply the conceptual framework
Dissociate: 5 Steps correct answers 1. ceasing to participate in all employee health and welfare
benefit plans sponsored by the attest client, unless the client is legally required to allow the
covered member to participate in the plan, and the covered member pays 100% of his or her
portion of cost
2. ceasing to participate in all other employee benefit plans by liquidating or transferring all
vested benefits in the client's defined benefit plans, defined contribution plans and similar
arrangements at the earliest date permitted under the plan
3. disposing of any direct or material indirect financial interest in the client
4. collecting or repaying any loans to/from the client other than those specifically permitted or
grandfathered by the code
5. assessing other relationships with the client to determine if they create threats to independence
that would require the application of safeguards to reduce threats to an acceptable level
Future employment with an attest client correct answers When an attest team member or PTI is
considering employment with the attest client, independence is impaired unless the team
member:
- reports the offer to the firm
- removes themselves from the engagement until the offer is rejected or we don't want the
position anymore
When you learn of another team member doing this you must report it.
Taking a job with an attest client correct answers A firms independence is impaired when a
partner or POPE goes to work for an attest client in a key position unless all conditions are met:
-amount due to the employee remain fixed during payout period.
-former employee cannot influence the accounting firm's operations/financial policies
, - former employee doesn't participate in the firms business and isn't associated with the firm.
Appearance or participation results from actions such as:
1. individual provides consultation for firm
2. firm provides individual with an office and related amenities
3. their name is on the firms office directory
4. their name is included as member of the firm in other membership lists of business,
professional, or civic organizations, unless the individual is clearly designated as retired
How long is the cooling period under SOX? correct answers 1 year preceding the beginning of
the audit.
If a covered member belongs to a social club that is an attest client is their an independence
problem? correct answers There is no independence problem if the membership is primarily a
social matter
If a covered member is a member of a trade association is independence impaired? correct
answers Yes if the trade association is an attest client or a POPE of a firm is employed by or
associated with a trade association in an important role.
What are the four safeguards if a CM is a member of a common interest realty association
(CIRA)? correct answers 1. CIRA performs functions similar to local governments
2. CM annual assessment is not material to either CIRA or CM
3. Liquidation of CIRA or sale of common assets would not result in distribution of covered
member
4. CIRAs creditors would not have legal recourse to CM assets if CIRA become insolvent
Does being a member of a credit union cause independence problems? correct answers Yes, if the
CM is only eligible to join because of provision of professional services.
No, if CM is eligible because of individual qualifications.
