a.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: The basic principles of corporate governance that appear to have been missing.
b.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To examine: Whether or not external auditors can expect the effectiveness of corporate governance.
c.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: The manner in which external auditors might respond to concerns about the quality of governance.
d.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: Whether or not the company should have an independent chair.
e.
Introduction: Corporate governance refers to keeping an oversight over the organizations operations and financial reporting. Corporate governance ensures that operations are in accordance with the objectives of the organizations and meet the stakeholders’ needs.
To explain: Whether or not the CEO of the company should be removed.
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Chapter 2 Solutions
AUDITING-TEXT (LOOSELEAF)
- Mary Ribukh was hired as a staff auditor of LGY and Company in 2005. In December 2012, he transferred to Quilava and Associates. In 2014, he returned back to LGY and Company until his retirement in 2020 at the age of 55. Question 1: Are the retirement benefits taxable to Anton? Question 2: Suppose he was terminated from employment due to dishonesty. Is the separation pay taxable to Anton? Question 3: Suppose he was terminated from employment due to the merger of the two audit firms Will the separation pay be taxable to Anton? Yes, Yes, Yes No, Yes No No Yes, Yes Yes, No, Noarrow_forwardTim, a member of a company desired to put forward a resolution about changing the director of the company. However, the accountant of the company mentioned to him that he cannot pass the resolution alone. Nevertheless, Tim did not take the advice of the accountant and put forward his resolution. Required1. With reference to Companies Act of Fiji 2015, explain the laws pertaining to members’ resolutions.arrow_forwardASSIGNMENT TWODazzle Co. is a stock‐market listed company that manufactures personal protection equipment. At a recent board meeting of Dazzle Co., a non‐executive director suggested that the company’s remuneration committee should consider scrapping the company’s current share option scheme, since executive directors could be rewarded by the scheme even when they did not perform well. A second non‐executive director disagreed, saying the problem was that even when directors acted in ways which decreased the agency problem, they might not be rewarded by the share option scheme if the stock market were in decline. Required:(a) Explain the nature of the agency problem in detail. (b) Discuss the use of share option schemes as a way of reducing the agency problem in a stock‐market listed company such as Dazzle Co.arrow_forward
- Themba lives in clarendon Jamaica, he is a shareholder of electro Tech Limited. He received notice of an annual general meeting of Electro Tech Limited to be held in Port of Spain, Trinidad. He cannot attend the meeting on that day, but feels strongly about certain of the proposed resolutions set out in the notice of the meeting, and wants to express his views on these matters to the board of directors. Themba also wishes to vote against certain of the resolutions which the company proposed to pass. Advise him how he could exercise his right to vote and to express his views at the annual general meeting of Electro Tech Limited even though he cannot attend the meeting with a law casearrow_forwardAndy Simmons is a CPA with his own accounting and tax practice. He occasionally does an audit for small business clients. One day an audit client shows Andy a letter from the local Property Tax Assessor’s office. It seems the client inquired about the process to be followed to appeal the 20 percent increase in his property taxes. He already wrote an appeal letter and was denied. The letter said that most folks who appeal those decisions hire a CPA to represent them before the administrative board in property tax assessment hearings. If your client asks you to represent him in the appeal process, can you do so under the AICPA Code? Explain.arrow_forwardRecently, Boho Ltd learned that one of the company's shareholders made statements to the media which caused anger and embarrassment for the New Zealand government. Boho Ltd's board of directors is concerned that the comments will negatively impact the company's chances of winning a million sales dollar with the New Zealand government. Analyse whether Boho Ltd can validly expropriate the shares of this shareholder, and if so, how it should be carried out.arrow_forward
- Munir has been appointed as a non-executive director director in Syarikat Mualim Sdn Bhd (“the company”). Other Mualim’s directors have now discovered that Robert has previously been an executive director of three public listed companies. Discuss whether there are any grounds on which the Registrar may disqualify Munir from acting as a non-executive director.arrow_forwardMr. B wanted to become a Board of Director, however 8 years ago he was convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years. He wants to run as Board of Director in the coming elections of the company next week. He comes to you, his well versed in law accountant, for advice. What would be your advice to him? Explain with basis. pls help me, thank youarrow_forwardKimball, a partner in a one-office firm, inherits 15 shares of Spotless Housekeeping Services stock. The stock has a market value of $25 per share; there is a ready market for them; and there are 300,000 shares outstanding. Spotless is an audit client of the firm, and Kimball does no work or consulting for Spotless engagements. Which of the following is CORRECT regarding Kimball receiving this stock and maintaining the firm's independence with Spotless? As long as Kimball does not work on the engagements for Spotless, nothing need be done. If he works on the engagements for Spotless, then the shares must be promptly sold to preserve the firm's independence. Since the shares are worth only $375 and they were inherited, nothing need be done. If Kimball transfers the shares to a blind trust where he is the beneficiary, independence with Spotless will not be impaired. The shares must be sold within 30 days of their receipt.arrow_forward
- Scott requested Jenny to work with the Bureau of Internal Revenue (BIR) in further reducing the tax liability of the company believing her to be an accountant. Meanwhile, Jenny took advantage of Scott’s mistaken belief and trust and convinced him that he would reduce the company’s tax liability by 50% in exchange for a substantive number of shares in the company. Is Scott’s donation of a substantive number of the company’s shares to Jenny valid? Why or why not?arrow_forwardWhat is the required treatment of each of the below events in the financial statements? Justify your decisions. a) On 25 July 20X9, Carey settled and paid a claim involving prior employees alleging sexual discrimination as a result of promotions announced at the Christmas party in 20X8. Five women who had been overlooked for management promotions undertook legal action in March 20X9. b) On 1 August 20X9, Carey Ltd made an announcement to the Singapore Stock Exchange of its intention to take over a private engineering partnership. This would increase sales revenue of Carey Ltd by 15%. It was to be funded by a 1:10 rights issue. c) On 12 August 20X9, a fire damaged the head office of Carey. The buildings, fixtures and fittings were only partly insured. d) At its 5 September 20X9 meeting, Carey’s board of directors voted to double the advertising budget for the coming year and authorised a change in advertising agencies.arrow_forwardKenny Merinoff and his daughter, Mia, own all outstanding stock of flamingo Corporation. Both Mia and Kenny are officers in the corporation and together with Kenny’s Uncle, Ira, comprise the entire board of directors. Flamingo uses the cash method of accounting and has a calendar year-end. In late 2013, the board of directors adopted the following legally enforceable resolution (agreed to in writing by each of the officers): Salary payments made to an officer of the corporation that shall be disallowed in whole or in part as a deductible expense for Federal Income tax purposes shall be reimbursed by such officer to the corporation to the full extent of the disallowance. It shall be the duty of the board of directors to enforce payment of each such amount. In 2019, Flamingo paid Kenny $800,000 in compensation. Mia received $650,000. On an audit in late 2020, the IRS found compensation of both officers to be excessive. It disallowed deductions for $400,000 of the payment to Kenny and…arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningIndividual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT