Question

Answer yes or no to each question.

1. Assume that a CPA has an audit client that has asked the CPA to recommend and design internal controls over financial reporting that will help in the client’s implementation of FASB ASC 606. Can the CPA accept this nonaudit engagement and remain independent for purposes of performing the audit?

2. Assume that a CPA has an audit client that has asked the CPA to develop a plan for the client to implement FASB ASC 842 and then to present the plan to the client’s board of directors. Can the CPA accept this nonaudit engagement and remain independent for purposes of performing the audit?

3. Assume that a CPA provides most of the financial support for the CPA’s ex-spouse who has just started a business. Is the CPA independent for purposes of performing the audit of the ex-spouse’s business?

Answer 1

1). No, CPA Cannot accept this non audit engagement & remain Independent for the purpose of performing the audit as Designing of Internal controls over financial reporting is not covered under the list of services CPA can provide to their audit client. Maker and checker concept is violated here. so, CPA cannot accept

2). Yes, CPA can Accept this non audit engagment of developing a plan for the client to implement FASB ASC 842 as it comes under Management Consultancy services which are permissible to do.

3). NO, CPA is not Independent for purposes of performing the audit of the ex-spouse’s business as he was the one who was providing the financial assistance to her Ex-spouse,he cannot remain independent.