Jones & Jones, CPAS, a one-office public accounting firm, has been asked to audit Majestic Mfg. Co. for the 20X3 calendar year. Majestic is not a public interest entity as that term is defined in the Conceptual Framework for AICPA Independence Standards. A survey of Jones & Jones personnel revealed several instances where relationships with Majestic might impair independence. The partners of Jones & Jones want the audit engagement, but they will not terminate any staff person or ask any partner to resign to obtain the work. With the restriction on non-termination of partners or staff, which of the following is a threat to Jones and Jones' independence with Majestic? I. Olson, a professional staff person, below the rank of manager, has been employed full time with Jones & Jones since August 20X2. Olson was also a director of Majestic for the first nine months of 20X2. II. Swanson is a manager with Jones & Jones. He had been treasurer of Majestic from January 20X0 through March 20X2. He resigned his position as treasurer and accepted employment as a manager with Jones & Jones on December 1, 20X2. I only II only I and II Neither I nor II

Jones & Jones, CPAS, a one-office public accounting firm, has been asked to audit Majestic Mfg. Co. for the 20X3 calendar year. Majestic is not a public interest entity as that term is defined in the Conceptual Framework for AICPA Independence Standards. A survey of Jones & Jones personnel revealed several instances where relationships with Majestic might impair independence. The partners of Jones & Jones want the audit engagement, but they will not terminate any staff person or ask any partner to resign to obtain the work. With the restriction on non-termination of partners or staff, which of the following is a threat to Jones and Jones' independence with Majestic? I. Olson, a professional staff person, below the rank of manager, has been employed full time with Jones & Jones since August 20X2. Olson was also a director of Majestic for the first nine months of 20X2. II. Swanson is a manager with Jones & Jones. He had been treasurer of Majestic from January 20X0 through March 20X2. He resigned his position as treasurer and accepted employment as a manager with Jones & Jones on December 1, 20X2. I only II only I and II Neither I nor II

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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Question

Jones & Jones, CPAS, a one-office public accounting firm, has been asked to audit Majestic Mfg. Co. for the 20X3 calendar year.
Majestic is not a public interest entity as that term is defined in the Conceptual Framework for AICPA Independence Standards. A
survey of Jones & Jones personnel revealed several instances where relationships with Majestic might impair independence. The
partners of Jones & Jones want the audit engagement, but they will not terminate any staff person or ask any partner to resign to obtain
the work.
With the restriction on non-termination of partners or staff, which of the following is a threat to Jones and Jones' independence with
Majestic?
1. Olson, a professional staff person, below the rank of manager, has been employed full time with Jones & Jones since August 20X2.
Olson was also a director of Majestic for the first nine months of 20X2.
II. Swanson is a manager with Jones & Jones. He had been treasurer of Majestic from January 20X0 through March 20X2. He resigned
his position as treasurer and accepted employment as a manager with Jones & Jones on December 1, 20X2.
OI only
O II only
● I and II
Neither I nor II

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