Question

(TCO C) Kent, CPA, is a staff auditor participating in the audit engagement of Fort, Inc. Based upon each of the circumstances below, indicate whether or not Kent’s actions impair his independence. Explain your response for each situation. Kent’s friend, an employee of another local accounting firm, prepares Fort’s Tax return. Kent’s sibling is the director of Internal Auditing for Fort, Inc.

Answer 1

1) Kent’s friend, an employee of another local accounting firm, prepares Fort’s Tax return.

In this case Kent’s action will not impair his independence because the relationship of friend is not considered in the disqualification of auditor.

2.Kent’s sibling is the director of Internal Auditing for fort Inc.

In this case Kent’s action will impair his independence because the sibling of Kent is the director of the Internal Auditing for Fort, Inc. Disqualification of Auditor states that the person whose relative is at the director level is not eligible to accept the audit engagement becuase in this case the independence of the auditor or his audit work can he hampered.