Current Employment Flashcards
The employment restrictions in the Code of Professional Conduct apply to:
All covered members
All 10-hour people
All “partners and professional employees (POPEs)
All managers in a position to influence the audit team
All “partners and professional employees (POPEs)
Correct! The employment restrictions apply toPOPEs.
Pai is an audit partner at the Hamrick Accounting Firm. Which of the following is true?
Pai could without impairing independence hold a tenured position at the local university, which is an audit client of Hamrick.
Pai could without impairing independence serve as a director in an attempt to reverse the recent unfortunate trends at a local nonprofit which is a Hamrick audit client.
Pai could without impairing independence act as a campaign treasurer for a personal acquaintance Sampson, who is running for mayor, even though the city is a Hamrick audit client.
Pai may serve as an honorary director of a small charitable organization that receives funding from a large foundation that Hamrick audits.
Pai may serve as an honorary director of a small charitable organization that receives funding from a large foundation that Hamrick audits.
Correct! Although Pai is a POPE, it is permissible for him to serve as a merely honorary director in this circumstance. He could not serve as a “real” director.
Chan was a talented accountant who worked as Chief Accounting Officer at Abex Corporation, which was audited by the Pleasant Hill Accounting Firm (PHAF). PHAF offered Chan a position as an auditor. Which of the following is true if Chan is to join PHAF without impairing the accounting firm’s independence relative to Abex?
So long as he has dissociated himself from Abex, Chan may join PHAF’s audit team without worry.
Although Chan may not join the audit team when the attest engagement covers any period of time when Chan was at Abex, he could serve in a “position to influence.”
Chan could join PHAF as an OPIO who had nothing directly to do with Abex as a client, so long as he dissociates himself from the client prior to becoming an OPIO.
Chan must serve a two-year “cooling off” period after leaving Abex and before joining PHAF.
Chan could join PHAF as an OPIO who had nothing directly to do with Abex as a client, so long as he dissociates himself from the client prior to becoming an OPIO.
Correct! It would not impair independence for Chan to be an OPIO, but he must first dissociate himself (cease participating in Abex benefit plans, sell all Abex stock, repay any loans to Abex, etc.).
Under the ethical standards of the profession, which of the following business relationships would generally not impair an auditor’s independence?
Promoter of a client’s securities.
Member of a client’s board of directors.
Client’s general counsel.
Advisor to a client’s board of trustees.
The role of advisor to a client’s board is not forbidden by AICPA independence rules.
Manny is a well-respected CPA in his hometown of Cut & Shoot, TX, which has a population of slightly over 5,000. Manny currently audits a nonprofit organization and has recently been approached by this organization to join its board. The board is currently made up of many influential figures in the community and they would like to add Manny’s name to that list for increased recognition. Manny would love to help out the community but is afraid that this might affect his independence. Which of the following situations would cause Manny’s involvement with the board to result in a lack of independence?
Manny’s position is purely honorary.
Manny has been asked to only contribute his name.
Manny is only required to vote in critical management affairs, which do not arise frequently.
Manny’s position is identified as honorary on external materials.
Manny is only required to vote in critical management affairs, which do not arise frequently.
A CPA serving on a charitable board can never vote or participate in management affairs and, therefore, this choice would impair independence.
