A key factor that an auditor provides is independence. The AICPA Code of Professional Conduct states that "a member in public practice should be independent in fact and appearance when providing auditing and other attestation services."
Required:
Do you consider the following circumstances to suggest a lack of independence? Justify your position. (Use your imagination. Specific answers are not provided in the chapter.) 1. 1. Jack Jones is a partner with a large audit firm and is assigned to the Ford audit. Jack owns 10 shares of Ford.
2. Melissa Chee has invested in a mutual fund company that owns 500,000 shares of Sears stock. She is the auditor of Sears.
3. Bob Franklin is a clerk/typist who works on the audit of AT&T. He has just inherited 50.000 shares of AT&T stock. (Bob enjoys his work and plans to continue despite his new wealth.)
4. Nancy Sodoma worked on weekends as the controller for a small business that a friend started. Nancy quit the job in midyear and now has no association with the company. She works full time for a large CPA firm and has been assigned to do the audit of her friend's business.
5. Mark Jacobs borrowed $100,000 for a home mortgage from First City National Bank. The mortgage was granted on normal credit terms. Mark is the partner in charge of the First City audit.