AUDITING THEORY

Kier Penales is an audit partner of a one-office accounting firm of Penales and Reina & Co. The firm has a total of 7 partners and 26 other professional accountants. Penales and Reina & Co. audits Abalos Bank and Kier sister, Amelia has just taken a job Vice-President for Finance and in charge of preparing the bank's financial statements. Maita Reina is concerned about independence since the bank plans to become a holding company and file statements with SEC.

Required: The accounting firms want to know if their independence will be questioned

by the Board of Accountancy. You have been asked to submit an analysis and conclusion

in each case taken separately.