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David, a member, is a sole practitioner CPA. Based on the work that David does for Jackson Spine, Inc., he is not independent with respect

David, a member, is a sole practitioner CPA. Based on the work that David does for Jackson Spine, Inc., he is not independent with respect to the company. Jackson Spine, Inc. requires audited financial statements for its line of credit with Graymore Bank. The company has hired Hanson & Potter, CPA's to perform the audit and issue the audited statements to the bank. Hanson & Potter, CPA's would like to utilize David on the audit of Jackson Spine, Inc. because of his extensive experience with the client and his knowledge of the books and records. Would Hanson & Porter, CPA's use of David on the audit impair their independence with respect to Jackson Spine, Inc.?

  • a) Hanson & Potter, CPA's is barred by the Code of Professional Conduct from using David on the audit for any purpose.
  • b) As long as Hanson & Potter, CPA's uses David's work in a manner similar to an internal auditor and complies with AICPA Statements on Auditing Standards, their independence would not be impaired.
  • c) David's lack of independence with respect to Jackson Spine, Inc. would not impair Hanson & Potter, CPA's independence because David's firm was not the firm engaged to perform the audit and issue the audited financial statements.

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