An audit client, March Corporation, requested that John Day, CPA, conduct a feasibility study to advise management
Question:
An audit client, March Corporation, requested that John Day, CPA, conduct a feasibility study to advise management of the best way the corporation can use electronic data processing equipment and which computer, if any, best meets the corporation's requirements. Day is technically competent in this area and accepts the engagement. Upon completion of Day's study, the corporation accepts his suggestions and installs the computer and related equipment that he recommended.
Required:
a. Discuss the effect that acceptance of this consulting services engagement would have upon John Day's independence in expressing an opinion on the financial statements of March Corporation.
b. A local company printing data processing forms customarily offers a commission for recommending it as a supplier. The client is aware of the commission offer and suggests that Day accept it. Would it be proper for Day to accept the commission with the client's approval? Discuss.
Step by Step Answer:
Principles Of Auditing And Other Assurance Services
ISBN: 9780072327267
13th Edition
Authors: Ray Whittington, Kurt Pany