Problem Four

As the quality control partner of the WCSU CPA Firm, you are required to periodically review the independence of each partner and professional staff at the firm to insure there are in independence issues with the firm's client base. You have come across four issues:

(1) A staff auditor on the engagement has a distant relative who is employed by a vendor that does a significant amount of business with clients.

(2) An audit client provides financial support to a number of charitable causes that also receive support from the accounting firm.

(3) A senior auditor on one audit engagement owns a financial interest in the common stock of the client.

(4) A client's Chief Executive Officer (CEO) graduated from the same university as the partner in charge of the WCSU CPA Firm.

Required: Which of the following would most likely be a violation of the independence requirement found in Generally Accepted Auditing Standards? Describe why one scenario above would be a violation of the independence rules, while the other three would likely not be violations.