The firm of Schilling & Company CPAs, has offices in Chicago and Green Bay, Wisconsin. Gillington Company, which has 1 million shares of outstanding stock, is audited by the Chicago office of Schilling; Welco, of the Chicago office, is the partner in charge of the audit. For each of the following circumstances, indicate whether the public accounting firms independence is impaired with respect to Gillington Company.

a. Johnson, a partner in the Chicago office, owns 100 shares of the stock of Gillington. He has no responsibilities with respect to the Gillington audit.

multiple choice 1

A) Independence is impaired

B) Independence is not impaired

b. Gizmo, a partner in the Green Bay office, owns 600 shares of the stock of Gillington. He has no responsibilities with respect to the Gillington audit.

multiple choice 2

A) Independence is impaired

B) Independence is not impaired

c. Masterson is a staff assistant in the Green Bay office and owns 10 percent of Gillingtons outstanding common stock. Masterson provides no services to Gillington and is not able to influence the engagement.

multiple choice 3

A) Independence is impaired

B) Independence is not impaired

d. Schilling, the partner in charge of the entire firm, works in the Green Bay office. He owns 100 shares of Gillington stock (market value $2 per share) but provides no services on the engagement.

multiple choice 4

A) Independence is impaired

B) Independence is not impaired

e. Gorman is a staff assistant on the audit. Gormans mother owns shares of Gillington that are material to her net worth and of which Gorman has knowledge.

multiple choice 5

A) Independence is impaired

B) Independence is not impaired