23. On August 29, 2020, Mar Bonafe, CPA, was offered and accepted the engagement to audit theannual financial statements of ABC Corporation for the fiscal and calendar year ended Dec, 31,2020. The audit began on Sept. 15, 2020, and ended on March 17, 2021. ABC Corporation isregulated by the SEC. Bonafe served as controller of ABC Corporation from Nov. 5, 2013 untilJan. 12, 2020 at which time he terminated his employment with ABC. Mar Bonafe owned amaterial amount of ABC Corporation ordinary or common shares from Nov. 5, 2013 until Aug, 15,2020, at which time he sold the shares. Is Mar Bonafe violation of the Code of Ethics due toin impairment of independence?a. Yes, because Mar Bonafe owned ABC shares at the start of the audit for Dec. 31, 2020.b. Yes, because Mar Bonafe served as a controller for ABC in previous years.c. Yes, because Mar Bonafe had an employment relationship with the client during part of theperiods covered by the financial statements.d. Yes, because it is still less than a year since Mar Bonafe has owned shares in ABC.

Auditor should have no bonafide interest in the organization under audit.

Answered: 3. On August 29, 2020, Mar Bonafe, CPA,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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