Question
Sherman & Hirsch, CPA's were engaged on December 1, 20X2 to audit the financial statements of Stearn Financial, Inc. for the year ended December 31,
Sherman & Hirsch, CPA's were engaged on December 1, 20X2 to audit the financial statements of Stearn Financial, Inc. for the year ended December 31, 20X2. While doing an internal investigation to determine whether any issues and/or threats to independence exist within the firm as it relates to the audit of Stearn Financial, Inc, the firm was able to satisfy itself on all bu tone issue Upon reviewing the code of profession conduct, and specifically rule 101 regarding independence, the firm was unable to find any interpretations or rulings regarding the one issue in question. Which of the following statements regarding who Sherman & Hirsch, CPA's should handle the one issue of independence that is in question?
a) When there is no interpretation or ruling that covers the issue of independence in question, the firm should send a written request to the AICPA to receive a private ruling on the issue involved. The firm shouldn't proceed with the audit until it receives the private ruling.
b) The firm should use the conservative approach and assume the issue in question would impair the firm's independence.
c) The firm should evaluate whether that circumstance would lead a reasonable person aware of all the relevant facts to conclude that there is an unacceptable threat to the firm's independence.
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