BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The CPA performs decision-making services for his client
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The CPA performs services wherein he is in effect, acting as an employee of the client
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The CPA losses his objectivity and acts in a manner as if he is advocating for the interest of his client
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The CPA does not extend his services beyond the presentation of recommendation or giving advice
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Detailed explanation-1: -However, when the CPA does not extend his services beyond the presentation of recommendation of giving advice, he does not impair his independence, and choice-letter “d” is correct.
Detailed explanation-2: -Independence of a CPA with respect to a client is not impaired if: The CPA has an immaterial joint, closely held business investment with the client. A CPA firm may not designate itself as “members of the AICPA” unless: All of its partners or shareholders are members of the Institute.
Detailed explanation-3: -Answer-Independence is considered to be impaired if, when the report on the client’s current year is issued, billed or unbilled fees, or a note receivable arising from such fees, remain unpaid for any professional services provided more than one year prior to the date of the report.
Detailed explanation-4: -According to the standards of the profession, which of the following circumstances will prevent a CPA performing audit engagements from being independent? Employment of the CPA’s spouse as a client’s director of internal audit.
Detailed explanation-5: -To be independent, the auditor must be intellectually honest; to be recognized as independent, he must be free from any obligation to or interest in the client, its management, or its owners.