The firm of McGraw and West, CPAS, has two offices, one In Phoenix and one in San Diego. The firm has audited the Cameron Corporation out of its Phoenix office for the past five years. For each of the following Independent cases, which occurred during the year under audit, indicate whether Independence would be impaired. a. Mary McGraw, a partner in the San Diego office, fell wildly in love with Bill Smith, the treasurer for Cameron Corporation. They were married in Las Vegas. During the week, McGraw still lives in San Diego and works in that office, while Bill Smith lives In Phoenix, working for Cameron. On weekends they commute to their home In Yuma. Mary does not participate in the engagement. b. Jim West is the father of Will West, a Phoenix partner. Jim West has a material Investment in Cameron. Will West is unaware of his father's Investment but does participate in the engagement. c. Bill Johnson, a senior in the San Diego office, has a material Investment in the capital stock of Cameron. He does not participate in the engagement.

The firm of McGraw and West, CPAS, has two offices, one In Phoenix and one in San Diego. The firm has audited the Cameron Corporation out of its Phoenix office for the past five years. For each of the following Independent cases, which occurred during the year under audit, indicate whether Independence would be impaired. a. Mary McGraw, a partner in the San Diego office, fell wildly in love with Bill Smith, the treasurer for Cameron Corporation. They were married in Las Vegas. During the week, McGraw still lives in San Diego and works in that office, while Bill Smith lives In Phoenix, working for Cameron. On weekends they commute to their home In Yuma. Mary does not participate in the engagement. b. Jim West is the father of Will West, a Phoenix partner. Jim West has a material Investment in Cameron. Will West is unaware of his father's Investment but does participate in the engagement. c. Bill Johnson, a senior in the San Diego office, has a material Investment in the capital stock of Cameron. He does not participate in the engagement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: You are an induction and training officer for Maher Public Accountants, a leading accounting firm…

A: Audit is an official examination of financial information of an entity. The person who conducts the…

Q: As you are planning the annual audit of Norton Corporation, you note that the company has a number…

A: Internal controls are set up in IT systems to ensure that the financial information that is being…

Q: Jones & Jones, CPAS, a one-office public accounting firm, has been asked to audit Majestic Mfg. Co.…

A: The AICPA Code of Professional Conduct lays forth standards for auditor independence. In this case,…

Q: The Office of the Auditor General is mandated to carry out audits of all public institutions in…

A: The internal audit function is an independent, objective assurance and consulting activity designed…

Q: During the audit of the Merrill Manufacturing Company,Ralph Pyson, CPA, has become aware of four…

A: Lawsuit: lawsuit is the legal proceeding where civil action is brought by one party against another…

Q: You have just been employed as a junior auditor at the chartered accountant firm of PMG. Upon…

A: The following information is provided to develop an understanding of the audit procedure of the…

Q: The audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2019.…

A: The role of an auditor is to provide an independent and objective assessment of the financial…

Q: Assuming that you are Lee Tower, set forth your decision regarding acceptance of the client,…

A: Integrity in the client's management: Integrity in the client's management is the prime factor to…

Q: (a) Explain the ethical problem in this case. Why is it a problem? words) (b) What can be done about…

A: In business dealings with clients, the companies/firms go through a lot of situations like this. In…

Q: J, B & J, Certified Public Accountants, has audited the Highcredit Corporation for the past five…

A: An accountant/ auditor becomes the owner that he creates during the accounting and auditing of the…

Q: type of audit report

A: Audit report is the document issued by the auditor to express his opinion on the true and fair view…

Q: Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includes…

A: Before starting an audit there should be common understanding between client and auditor regarding…

Q: Your firm is the auditor of Happy Days, an entity which provides hospitality packages at racecourses…

A: Part (i) As per IESBA Code of Ethics: "Accepting gifts or hospitality from an audit client may…

Q: Your client, Sonny Days Limited (Sonny Days) is a company involved in the manufacture and…

A: SOLUTION- A KEY AUDITOR MATTER ARE THOSE MATTERS WHICH ACCORDING TO PROFESSIONAL JUDGEMENT AND…

Q: During your annual audit of Walker Distributing Company, your assistant, Jane Williams, reports to…

A: Answer:- Audit meaning:- An audit is the systematic examination of the books of accounts of the…

Q: Opal Ltd has had an internal audit function for 15 years. Until they retired three months ago, the…

A: Outsourcing refers to hiring another company for providing a particular service or activity.

Q: John Josephs an audit manager for Tip, Acanoe & Tylerto, was asked to speak at a dinner meeting of…

A: Answer:- A. Client Acceptance Pre Planning Establish materiality and assess risk Plan the audit…

Q: You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for…

A: Definition: Independent auditor: Independent auditor or external auditor is the accountant who is…

Q: For the following independent situations, assume that you are the audit partner on the engagement:…

A: Audit opinion refers to the decision of the auditor which he takes after evaluating the financial…

Q: You are the audit senior responsible for the audit of Sampson Limited. You are currently planning…

Q: accounts payable assertions

A: Audit of accounts payable is done as a part of audit of financial statements to ensure that the…

Q: The audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2019.…

A: Disclaimer: "Since you have asked multiple questions, we will solve the first question for you. If…

Q: Sandoval Research is required to file its audited financial statements with the Government…

A: The objective of implementing safeguards in an audit is to mitigate threats to independence to an…

Question

The firm of McGraw and West, CPAS, has two offices, one in Phoenix and one in San Diego. The firm has audited the Cameron
Corporation out of its Phoenix office for the past five years. For each of the following independent cases, which occurred during the
year under audit, indicate whether Independence would be impaired.
a. Mary McGraw, a partner in the San Diego office, fell wildly in love with Bill Smith, the treasurer for Cameron Corporation. They were
married in Las Vegas. During the week, McGraw still lives in San Diego and works in that office, while Bill Smith lives in Phoenix,
working for Cameron. On weekends they commute to their home In Yuma. Mary does not participate in the engagement.
b. Jim West is the father of Will West, a Phoenix partner. Jim West has a material Investment in Cameron. Will West is unaware of his
father's Investment but does participate in the engagement.
c. Bill Johnson, a senior in the San Diego office, has a material Investment in the capital stock of Cameron. He does not participate in
the engagement.
d. Sandra Steversen, a staff assistant in the Phoenix office, works on the Cameron audit. Her uncle works as the chief accounting
officer for Cameron.
e. Bill Adams, a senior in the Phoenix office, does not work on the Cameron audit but owns 9 percent of Cameron's outstanding equity
(common stock).
Case a
Case b
Case c
Case d.
Case e.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: introduction to auditing

VIEW

Step 2: Part 1 where mary mcgrew married treasurer of auditee

VIEW

Step 3: Part 2- where partners father holds shares in auditee

VIEW

Step 4: Part 3- where senior offices holds capital stock in auditee

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

For-profit vs Not-for-profit organizations

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Tammy Potter, a new partner with the regional CPA firm of Tower & Tower, was recently appointed to the board of directors of a local civic organization. The chairman of the board of the civic organization is Lewis Edmond, who is also the owner of a real estate development firm, Tierra Corporation. Potter was quite excited when Edmond indicated that his corporation needed an audit and he wished to discuss the matter with her. During the discussion, Potter was told that Tierra Corporation needed the audit to obtain a substantial amount of additional financing to acquire another company. Presently, Tierra Corporation is successful, profitable, and committed to growth. The audit fee for the engagement should be substantial. Because Tierra Corporation appeared to be a good client prospect, Potter tentatively indicated that Tower & Tower wanted to do the work. Potter then mentioned that Tower & Tower’s quality control policies require an investigation of new clients and approval…
The audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2019. However, Rick Carlson was uncertain whether it could happen. As the review partner, he had just completed going over the work paper files of the senior auditor in charge of the engagement, Grace Sloan, and had way too many questions to wrap things up by the end of the week. Rick called Grace into his office and asked her about some questionable judgments she had made. He hoped her explanations would be satisfactory and he could move on with completing the audit. Why did you approve the accounting for new acquisitions of plant and equipment that were not supported by adequate underlying documentation? Why did you accept the client’s determinations of accrued expenses rather than make your own independent judgments? How can you justify relying on last year’s work papers to determine the proper allowance for uncollectibles one year later? To say Grace was stressed out would be an…
Four friends who are auditing students have a discussion. Evans says that the primary responsibility for the adequacy of disclosure in the financial statements and footnotes rests with the auditor in charge of the audit field work. Mercy says that the partner in charge of the engagement has the primary responsibility. Abdul says the staff person who drafts the statements and footnotes has the primary responsibility. Peter contends that it is the client’s responsibility.
Marissa is an audit intern working at Marshall CPA firm. Her supervisor at Marshall CPA firm has explained that the audit of property, plant and equipment and the related accounts ties in to management's expectations of the firm's earnings. Marissa is unclear as to how this relationship works and asks the supervisor to elaborate. Which of the following would be the most accurate response? O The relationship is fairly straightforward. If the client's management is keen to show strong earnings to beat analysts' expectations, they may manipulate depreciation expenses to boost these earnings. O The best way to think about this relationship is to think about how fixed assets are depreciated over time, and the incentive management has to shorten useful lives to decrease depreciation expenses. The relationship works on the premise that when property, plant and equipment is amortized, the firms earnings are boosted through the accelerated amortization of fixed assets. O None of these answer…
Frank James, a highly competent employee of BrinkwaterSales Corporation, had been responsible for accounting-related matters for two decades.His devotion to the firm and his duties had always been exceptional, and over the years,he had been given increased responsibility. Both the president of Brinkwater and thepartner of an independent CPA firm in charge of the audit were shocked and dismayedto discover that James had embezzled more than $500,000 over a 10-year period bynot recording billings in the sales journal and subsequently diverting the cash receipts.What major factors permitted the embezzlement to take place?