Alex is an audit staff working on the annual financial statement audit of Landscapers, Inc. Alex's mother has a significant investment portfolio, but owns only 1 share of Landscapers, Inc. and Alex is aware of such ownership. Has independence been violated? No, only immediate family members are prohibited from owning stock in our audit clients. Yes, close relatives must follow the same rules as covered members. No, dose relatives may own stock in our audit clients so long as it is not material to their net worth Yes, because Alex is aware of the ownership, independence has been violated. Summer is the lead partner on the audit of Carluccio, Inc. a publicly held company. She is excited about the upcoming audit, because this will be her seventh year as partner on the engagement and she finally feels like she knows the clients books and processes inside and out. If she is the partner on the upcoming audit, has independence been violated? 0 Yes, partners are required to rotate off an audit after 5 consecutive audits. No, there are no constraints on how long a partner may stay on an audit. O Yes, partners are required to rotate off an audit after 2 consecutive audits. No, partners are required to rotate off an audit after 10 consecutive audits. American CPA's, LLP audits Marshall, Inc., a public company. Management of Marshall, Inc. requested that a specialty division of American CPA's perform an appraisal of a building Marshall, Inc. is hoping to put on the market. American CPA's agree to perform the service upon pre-approval from the Audit Committee. If they accept the engagement, has independence been violated? Yes, appraisals are a prohibited by the PCAOB and may not be performed for audit clients. No, appraisals are not prohibited by the PCAOB and therefore may be provided to audit clients. Yes, the PCAOB prohibits any other services from being provided to audit clients. No, since the audit committee pre-approved the service it may be provided. Rhett Traitor is an audit staff with Father & Son United, LLP. He is currently working on the annual financial statement audit of Bulls, Inc. Rhett's wife owns 1 share of Bulls, Inc., but Rhett is unaware of such ownership. Has independence been violated? No, since Rhett is unaware of the ownership it is not a violation. Yes, immediate family members are considered covered members. O No, since 1 share is likely not material to her net worth. During an audit of a public company, the auditor asks management for an amortization schedule of a significant Bond they have outstanding. Management tells the auditor to do it themself since the auditor has more expertise in that area and would be able to design and calculate a more accurate amortization schedule. If the auditor prepares the amortization schedule has independence been violated? It depends, if the auditor who prepares the amortization schedule has his manager review his work, then independence has NOT been violated. Yes, this could be considered bookkeeping or performing a management function which are prohibited services for public companies. No, auditors are here to help their clients with accounting dilemmas. It is expected that auditors will perform these services from time to time. the new staff on the audit of Noof, Inc. owns a few shares of the client's stock which he was given as a gift last Christmas.They are not material to his net worth. He does not report the stock ownership to his firm, because his low level on the audit team precludes him from influencing the audit. Has independence been violated? No, since he is only a staff he does not have influence over the audit. Yes, any audit team member is a covered member. No, since it's not material to his net worth it does not violate independence rules. No, since it was a gift it does not violate independence rules. Larry Franko is a partner in the Orlando office of Paul & Pena., CPAs. Larry's brother is employed in an audit-sensitive position by Just-in-Time Appliances, a publicly held company in Miami, FL. Just-in-Time Appliances is one of the audit Klients for the Miami office of Paul & Pena., CPAs. Neither Larry nor personnel from the Orlando office is involved in the audit of Just-in-Time. Has independence been violated? Yes, since Larry is a partner of Paul & Pena he is a covered member with respect to Just-in-Time Appliances No, Larry is not on the audit of Just-in-Time Appliances and therefore is not a covered member. O No, the Just-in-Time audit is performed out of the Miami office and Larry is a partner in the Orlando office. No, siblings are not included in family relationships that are prohibited. Dennis financed a car in June 2017 with Roberts Bank. In December 2017 he was assigned as the audit senior for the Roberts Bank annual audit. If he stays on the audit, has independence been violated? No, car loans are permitted under the independence rules. No, since he is only a senior and not a manager or above. Yes, he is covered member with respect to Roberts Bank and therefore is not permitted to have any loans with their bank. Ethan Evans is an audit manager with Beam, Makinson, and Rush CPAs, a one- office CPA firm. Ethan owns 100 shares of common stock in one of the firm's audit clients, but he does not provide any audit or non-audit services to the company. Has independence been violated? No, since Ethan is not a partner in the office he does not have to be independent of audit clients other than his own. No, any audit employee (intern through partner) who does not work on the audit engagement may own stock in the audit client. Yes, no audit employee (intern through partner) is permitted to own stock in a firm's audit clients. Yes, since Ethan is a manager or above in the office of the audit, he is considered a covered member