YOUCPA is a regional CPA firm engaged in public audit work of small- and medium-size firms in the Midwest. The YOUCPA firm has their main office in Chicago, Illinois, and regional offices in Minneapolis, Minnesota and Indianapolis, Indiana. The managing partners are located in Chicago. YOUCPA also provides tax preparation and information consulting to customers and is an approved PCOAB audit firm.

Your client, the publicly traded Fresno Freezer Corporation, is located in Elgin, Illinois, a small city located outside of Chicago. The client has the main plant there and has distribution centers in Indianapolis and Minneapolis.

The Fresno Freezer Corporation has contracted with YOUCPA for an audit. During the audit, the audit team has asked you to determine if everyone on the engagement team is independent.

The following individuals are on the engagement team and on the management of YOUCPA:

• Beth Wright, Supervisor of Auditing assigned to Client, YOUCPA
  • Will be auditing the distribution locations
  • No financial interest directly in the client
  • Does own a mutual fund that is invested in the client
  • Mutual fund estimated value is 0.01% of the total value of the stock market value of the client
  • Mutual fund makes all decisions on who, when, and how much they invest in corporations
  • Total investment in the mutual fund is $1,000
• Wilbur Singation, Auditor, YOUCPA
  • No financial interest in the client
  • No relative with the client
  • No past history working with the client in a direct manner
  • Has contacted a head hunter looking for a new, better position
  • Head hunter has discussed his qualifications with many firms, discreetly
  • Wilbur does not know the firms or the content of those discussions
• Sam Martin, Auditor, YOUCPA
  • No financial interest in the client
  • Cousin works with the client in a role as the mail distribution person
  • Cousin handles the mail
  • Conversation with cousin has been rough in the past over a small debt the cousin still will not pay
  • The amount of the debt is $500
• Mary Franks, Auditor, YOUCPA
  • No financial interest in the client
  • No relative with the client
  • No past history working with the client in a direct manner
• Phil Cole, Auditor, YOUCPA
  • Recently joined the team
  • Used to work at the client less than a year ago
  • Was responsible for financial planning and control
  • Left to experience the auditing profession
• Callie Smart, Auditor, YOUCPA
  • Just graduated from a prestigious online university in Illinois
  • No relative or any direct relationship to the client
  • No investment in the client
• You, Auditor, YOUCPA
  • No investment in the client
  • No past working relationship with the client in a direct manner
  • No relatives working at the client

For each individual on the engagement team and on the management of YOUCPA, complete the following:

• Determine if they are or are not independent.
• Explain your reasoning.