True Flase

Question 1

Firms may maintain depository accounts at a bank that is an attest client if they conclude that the likelihood is remote that the bank will experience financial difficulties.

Answer 1

True

Question 2

Individual covered members may maintain such accounts if the balance in the depository account is fully insured,

Answer 2

True

Question 3

Individual covered members may maintain such accounts if any uninsured amounts were not material to the covered member’s worth

Answer 3

True

Question 4

Individual covered members may maintain such accounts If uninsured accounts are considered material, they are reduced to an immaterial amount within 30 days of becoming material.

Answer 4

True

Question 5

Generally, a covered member’s brokerage account at an attest client broker-dealer would not impair independence

Answer 5

False

Question 6

A a covered member’s brokerage account at an attest client broker-dealer would not impair independence if attest client’s services were rendered under the attest client’s normal terms, procedures, and requirements.

Answer 6

False

Question 7

A covered member’s brokerage account at an attest client broker-dealer would not impair independence if any covered member’s assets subject to the risk of loss are immaterial to the covered member’s net worth.

Answer 7

Fasle

Question 8

A covered member’s brokerage account at an attest client broker-dealer would not impair independence if attest client’s services were rendered under the attest client’s normal terms, procedures, and requirements and any covered member’s assets subject to the risk of loss are immaterial to the covered member’s net worth.

Answer 8

True

Question 9

A. An insurance policy is not a financial interest unless it offers an investment option.

Answer 9

True

Question 10

If there is an investment option in Insurance policy, there would still not be an independence problem if the covered member bought the policy under normal terms and conditions, unless the covered member had the authority to supervise or participate in the investment decision and the covered member invested in an attest client.

Answer 10

True

Question 11

If there is an investment option in Insurance policy, there would still not be an independence problem if the covered member bought the policy under normal terms and conditions, unless the covered member had the ability to select the policy’s underlying investments or

Answer 11

True

Question 12

If a covered member borrows from (or loans to) an attest client or any of its officers, directors, or 10% owners, there is likely an independence problem, especially if the client is not a lending institution.

Answer 12

True

Question 13

If a covered member keeps payments current and otherwise complies with loan or lease terms, auto loans and leases collateralized by the car do not impair independence.

Answer 13

True

Question 14

Even if a covered member keeps payments current and otherwise complies with loan or lease terms, Loans fully collateralized by cash surrender value of an insurance policy impair Independence.

Answer 14

False

Question 15

If a covered member keeps payments current and otherwise complies with loan or lease terms, Loans fully collateralized by cash deposits at the same lending institutions (e.g., passbook loans) do not impair independence.

Answer 15

True

Question 16

If a covered member keeps payments current and otherwise complies with loan or lease terms, aggregate outstanding balances from credit card and overdraft reserve accounts of $10,000 or less do not impair independence.

Answer 16

True

Question 17

Capital leases (leases to own) do not impair independence.

Answer 17

False

Question 18

All of Operating lease arrangements do not impair independence

Answer 18

False

Question 19

Audit firm can have an operating lease with attest client that follow GAAP rules, comparable with similar leases and payments are made on time in accordance with terms and conditions.

Answer 19

True

Question 20

Audit firm and attest client can make a cooperative venture if they have separate contracts that do not create obligation with them, and both do not take each other’s responsibilities and both do not act as one another’s agents.

Answer 20

True

Question 21

Cooperating with an attest client to provide services to a third party or to develop a product is problematic.

Answer 21

True

Question 22

Both covered memeber and attest client can have jointly held investment in public company like Microsoft

Answer 22

True

Question 23

The audit firm and an attest client can both own material stakes in a small company.

Answer 23

Flase

Question 24

A covered member and an officer of an attest client can jointly buy a sailboat.

Answer 24

False

Question 25

A covered member and an officer of an attest client can jointly buy a vacation home.

Answer 25

False

Question 26

IFM may not work for attest clients or own financial interests in them (unless the interests are both indirect and immaterial).

Answer 26

True

Question 27

Irrespective of the exceptions, immediate family members cumulatively may not own more than 5% of an attest client.

Answer 27

True

Question 28

A covered member’s immediate family members (IFM) may work for an attest client in “key position”

Answer 28

False

Question 29

Immediate family members may only work for an attest client in a non-key position

Answer 29

True

Question 30

IFM can participate in an employee benefit plan that is an attest client or is sponsored by an attest client

Answer 30

False

Question 31

IFM may participate in an employee benefit plan that is an attest client or is sponsored by an attest client only if certain conditions are met

Answer 31

True

Question 32

IFM can have Employee benefit Plan that is offered to all employees in that position, IFM does not serve in a position of Governor of the plan and does not have the ability to supervise or participate in the plan’s investment decisions or there is no investment options available

Answer 32

True

Question 33

Independence is impaired if the close relative - of a person in a position to influence or other partner in the office - has a financial interest that the person in a position to influence or other partner in office has reason to believe was material to the close relative, and
enabled the close relative to exercise significant influence over the attest client.

Answer 33

True

Question 34

Independence is impaired if the close relative - of a person in a position to influence or other partner in the office - has a financial interest that the person in a position to influence(PTI) or other partner in office(OPIO) has reason to believe was material to the close relative, and enabled the close relative to exercise significant influence over the attest client.

Answer 34

True

Question 35

Michael was on the ABC Accounting Firm’s audit team for the Rasmussen Corporation audit. Rasmussen’s officers were so impressed with Michael that they offered him a job as Director of Internal Audit at Rasmussen. Michael Remove himself from the engagement as he considers the offer.

Answer 35

True