Introduction to MIPPs Independence Rules Flashcards
Must a CPA in public practice be independent in fact and appearance when providing the following services?
Compilation of personal financial forecast
Preparation of a tax return
Compilation of a financial forecast
NONE
This answer is correct because an accountant need not be independent to provide compilation services or prepare tax returns.
Under the Code of Professional Conduct of the AICPA, which of the following is required to be independent in fact and appearance when discharging professional responsibilities?
A CPA in public practice providing tax and management advisory services.
A CPA in public practice providing auditing and other attestation services.
A CPA not in public practice.
All CPAs.
A CPA in public practice providing auditing and other attestation services.
Which of the following is not a “covered member” under the Independence Rule of the Code of Professional Conduct?
A partner in the same office as the lead attest partner.
A manager that provides five hours of tax services to the client.
A professional employee that is assigned to the engagement.
A partner that manages the attest practice for the firm.
A manager that provides five hours of tax services to the client.
This answer is correct because partners or managers must provide more than 10 hours of nonattest services before they are considered to be covered members.
Which of the following is an example of the type of threat to independence that the AICPA’s conceptual framework anticipates in its rules?
ABC Auditing prepared source documents for client XYZ Co. that were ultimately audited by ABC.
ABC Auditing acted as a promoter of audit client XYZ Co.’s stock in an initial public offering.
ABC Auditing’s audit partner in charge of the XYZ Co. audit learned that her spouse had been promoted from a nonmanagerial role to CFO at XYZ.
All three choices provided.
All three choices provided.
Because the three choices are all accurate, this is the best answer.
The Melancon accounting firm audits XYZ Co. out of its Boston office. Who, among the following Melancon employees, is a “covered member” regarding XYZ?
Sim, the receptionist who handles many administrative tasks for the XYZ audit team.
Tim, the records guy who lugs around many, many boxes of records that the audit team must review.
Bit, the new college accounting graduate, who was added to the XYZ audit team on his first day at Melancon.
None of the three choices provided.
Bit, the new college accounting graduate, who was added to the XYZ audit team on his first day at Melancon.
As a staff member who works on the engagement, Bit is a “covered member.”
