4. While conducting the external audit of GreenLeaf Enterprises, the audit manager of Jackson external auditors responsible for the day-to-day operations and staff assigned to the audit has been meeting with the CFO of GreenLeaf Enterprises each Friday for a working lunch at a local restaurant. The meeting is designed to provide an informal atmosphere whereby the audit manager can keep the CFO abreast of the audit and any important matters needing the CFOs attention. A potential issue with independence exists here because A. it may be perceived that the audit manager and CFO meeting weekly for lunch compromises independence in fact B. it may be perceived that the audit manager and CFO meeting in this manner compromises independence in appearance C. it may be assumed by both the client and audit staff that the audit manager is using the lunch to discuss important accounting issues offline D. it may be perceived that the weekly meetings have been arranged by the CFO to ensure that there are no surprises with respect to the rendering of the audit opinion upon conclusion of the audit 5. During the external audit of Starbright Company, the external auditor has noted that the company has an extremely high turnover of employees. During a recent meeting, Starbright management has advised that the treasurer has recently left to take another position with a different company, and has asked the senior audit manager assigned to the audit to sign checks in an emergency capacity until a suitable replacement has been found. Which of the choices below best describe the problem with this situation? A. The audit manager may take advantage of this situation to write other checks for personal gain, and there may be no internal controls to detect this. B. The CPA authorizing disbursements of client funds, even in an emergency capacity may represent a threat to independence as the auditor is exercising authority on behalf of a client. C. The audit manager has been placed in a situation whereby a conflict of interest exists, and should withdraw from the engagement immediately. D. By writing checks on behalf of the client, the external auditor assumes responsibility for any bounced checks. 6. A covered member, under the independence rules in the AICPA Code of Professional Conduct, is best defined as a person in a position to A. potentially influence attest decisions or the outcome of an attest engagement B. potentially influence decisions or outcomes in non-audit services C. take on or influence a third-party position D. perform tax services that is both independent in fact and appearance 7. Which of the following statements is true? A. A covered member can own one share of an attest client because it is immaterial. B. A covered member cannot own a mutual fund which contains attest client shares, as long as the investment in the mutual fund is not material to the covered member. C. A covered member can be an executor of an estate, which invests in an attest client, as long as the investment is not material. D. A CPA firm as an entity is prohibited from the same activities as a covered member of the firm. 8. CPAs in public practice are required to adhere to strict rules pertaining to client confidentiality. In gene client permission must be obtained before the CPA releases any confidential information. Which of the scenarios below best represents a viable exception to the client confidentiality rules? A. An audit client of the CPA contacts the auditor to object about information that will be disclosed i financial statements which the client feels is confidential. B. The CPA discloses confidential client information as a result of a subpoena received from a le authority. C. The CPA discloses all confidential client information as part of a peer review instituted by a State Board of Accountancy. D. There are no exceptions to the client confidentiality rule.