The following are situations in which auditors may find themselves.

Required

a. What are the four guiding principles that have been developed by the SEC for auditor independence?

b. Are the principles applicable only to SEC companies, or do they apply to auditors of smaller, privately-held companies as well?

c. For each of the situations, indicate whether it appears to violate the SEC's independence principles. Explain your answer.

Situation

1. Spencer is the partner in charge of the audit of Flip Company. He has half interest in a joint venture with Flip's CFO.

2, Victoria is the senior in charge of the audit of Holder Company.

During the past year, she filled in for the chief accountant who had emergency surgery and was out for six weeks.

3. Brandon has been asked by an audit client to represent the client in negotiations with the management of another company that the client wants to acquire.

4. Sanders is the partner in charge of the audit of the Marshall Co.The CEO and CFO have asked Sanders to prepare their personal federal and state income tax returns as well as the tax returns for the company.