On April 2, 2021, AOW then billed Accord for
AOW auditors found that Accord's management and board of directors did not fully disclose the stage of the appeal of the Civic Company case, had improperly deferred a material loss on ne product start-up costs as an element of its inventory, and had accrued sales revenue for promotional chip sales that carried an unconditional right of return. As partner in charge of the engagement, D. Ward agreed with the president that the accounting and disclosure were suitable to protect Accord's shareholders from adverse business developments, and he issued a standard unmodified opinion that was included in the entity's 10-K annual report filed with the SEC and dated April 1, 2021.
On April 2, 2021, AOW then billed Accord for the $200,000 audit fee and sent a reminder for payment of the $265,000 consulting fee.
Required:
a. Was AOE independent for the audit of Accord for the fiscal year ended December 31, 2017?
b. Did Ward and AOW follow generally accepted auditing standards in the audit?
c. Did Ward and AOW violate any section(s) of the Securities Exchange?
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