Bill Jones is a partner with Adelson & Co., a one office CPA firm located in Tucson, Arizona. He is the engagement partner on the audit team of NRG, LTD, a public company and he has just discovered that his wife Sophia owns 100 shares of NRG, shares worth $10 each.
a. What effect, if any, does Sophia’s investment have on the independence of Bill and Adelson & Co.?
b. Briefly describe the SEC’s requirements which might lead to a conclusion that the firm is able to maintain independence in this situation.
c. Briefly describe the PCAOB’s requirements which might lead to a conclusion that the firm is able to maintain independence in this situation.