ACCT 555 Week 2 Homework Assignment

ACCT 555 External Auditing
(DeVry - January 2016)

4-18 (Objective 4-6) The following questions concern independence and the Code of Professional Conduct or GAAS. Choose the best response.                                                                                                                                                a. What is the meaning of the generally accepted auditing standard that requires the auditor be independent?          
b. The independent audit is important to readers of financial statements because it                                          
c. An auditor strives to achieve independence in appearance to                                                                                             
4-19 (Objective 4-7) The following questions concern possible violations of the AICPA Code of Professional Conduct. Choose the best response.

a. In which one of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining the audit fee?
b. The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of the client. In which one of the following situations would disclosure by a CPA be in violation of the code?
c. A CPA’s retention of client records as a means of enforcing payment of an overdue audit fee is an action that is            

4-20 (Objectives 4-5, 4-6) The following situations involve the provision of nonaudit services. Indicate whether providing the service is a violation of AICPA rules or SEC rules including Sarbanes–Oxley requirements on independence. Explain your answer as necessary.

4-21 (Objectives 4-6, 4-7) Each of the following situations involves a possible violation of the AICPA’s Code of Professional Conduct. For each situation, state the applicable section of the rules of conduct and whether it is a violation. 

4-22 (Objectives 4-6, 4-7) Each of the following situations involves possible violations of the AICPA’s Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases in which it is a violation, explain the nature of the violation and the rationale for the existing rule.                                                                                                                                                                                                                                               
5-17 (Objective 5-6) The following questions deal with liability under the 1933 and 1934 securities acts. Choose the best response.

5-21 (Objectives 5-3, 5-5) Doyle and Jensen, CPAs, audited the accounts of Regal Jewelry, Inc., a corporation that imports and deals in fine jewelry. Upon completion of the audit, the auditors supplied Regal Jewelry with 20 copies of the audited financial statements. The firm knew in a general way that Regal Jewelry wanted that number of copies of the auditor’s report to furnish to banks and other potential lenders.                                                                                                                                                                                                                                   
5-26 (Objective 5-5) Sarah Robertson, CPA, had been the auditor of Majestic Co. for several years. As she and her staff prepared for the audit for the year ended December 31, 2010, Herb Majestic told her that he needed a large bank loan to “tide him over” until sales picked up as expected in late 2011.
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