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6/5/2017 Wiley CPAexcel ­ AUD

Overview

Upon completion of this lesson, candidates should be able to:

Understand the types of nonaudit services that can be provided to a private company attest client.

Understand the types of nonaudit services that cannot be provided to a private company attest client
.

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6/5/2017 Wiley CPAexcel ­ AUD

Study Guide

Overview

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6/5/2017 Wiley CPAexcel ­ AUD

Tax Services Impaired Not


Impaired

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6/5/2017 Wiley CPAexcel ­ AUD

Assuming that CPA does not have custody or control over client's funds and that client    
employee reviews and approves tax return prior to transmission to taxing authority, and,
if required for filing, signs tax return, then:
• Preparing tax return   x
• Transmitting tax return to taxing authority   x
• Transmitting payment   x
Signing and filing tax return on behalf of client management if authorized by   x
management and requirements are met
Representing client in administrative proceedings before taxing authority   x
Representing client in court to resolve a tax dispute x  

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Notes

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Supplementary Questions

Question 1 (RESP-0014B)
Larry Sampson is a CPA and is serving as an expert witness in a trial concerning a corporation's financial
statements. Which of the following is(are) true?
Sampson's status as an expert witness is based upon his specialized knowledge, experience, and
I.  
training.
II.   Sampson is required by AICPA ruling to present his position objectively.
III.   Sampson may regard himself as acting as an advocate.
I only.
I and II only.
I and III only.
III only.

Question 2 (RESP-0011B)
According to the standards of the profession, which of the following activities would most likely not impair
a CPA's independence?
Providing advisory services for a client.
Contracting with a client to supervise the client's office personnel.
Signing a client's checks in emergency situations.
Accepting a luxurious gift from a client.

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Slides

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Flashcards

1
May a member post client- Yes.

coded transactions to an
attest client's general ledger?

2
May a member serve as an No.

expert witness for an attest


client in litigation not relevant
to the audit?

3
May a member present No.
business risk considerations to
the attest client's board of
directors on management's
behalf?
4
May a member execute No.
transactions to buy or sell
securities for an attest client?

5
May a member assist Yes.

managers of an attest client in


analyzing the effects of
proposed transactions?

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6
May a member design,
develop, install, and/or Yes.
integrate an attest client's
information system if that
system is unrelated to the
client's financial statements
and accounting records?
7
May a member hire or No.
terminate an attest client's
employees?

8
May a member determine
which, if any, No.
recommendations for
improving internal control
systems should be
implemented by an attest
client?
9
May a member sign and file a Yes.
tax return on behalf of an
attest client's management if
authorized by management?

10
May a member serve as a No.

benefit plan fiduciary for an


attest client?

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Knowledge Checks

Question 1 (PQ8971)

The Sun Accounting Firm audits ABC Co. It may provide actuarial services to ABC that have nothing to do
with ABC's financial statements without impairing independence.
True
False

Question 2 (PQ8977)

The Klein Accounting firm audits ABC Co. It may represent ABC in court in a tax dispute with the Internal
Revenue Service without impairing independence.
True
False

Question 3 (PQ8974)

The Kang Accounting Firm audits ABC Co. It may act as a distributor of ABC's offering documents pursuant
to a securities filing without impairing independence.
True
False

Question 4 (PQ8975)

The Wang Accounting firm audits ABC Co. It may assist ABC in drafting offering documents without
impairing independence.
True
False

Question 5 (PQ8969)

The Mig Accounting Firm audits ABC Co. It may prepare account valuations for ABC's employee benefits
plans without impairing independence.
True
False

Question 6 (PQ7517)

Tally audits Tupelo Co., a private company. Tally is somewhat of a tech whiz, and Tupelo would like Tally
to operate its local area network. Tally can do this without creating an independence problem.
True
False

Question 7 (PQ8976)

The Goach Accounting firm audits ABC Co. It may, with ABC's authorization, transmit payment of ABC's
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taxes to the Internal Revenue Service on ABC's behalf without impairing independence.
True
False

Question 8 (PQ8972)

The Patel Accounting Firm audits ABC Co. It may recommend a plan for improving ABC's control processes
and assist in implementation of the plan without impairing independence.
True
False

Question 9 (PQ8973)

The Peskar Accounting Firm audits ABC Co. It may hire ABC's new chief financial officer without impairing
independence.
True
False

Question 10 (PQ8970)

The Solomon Accounting Firm audits ABC Co. It may approve vendor invoices for payments while providing
bookkeeping services to ABC without impairing independence.
True
False

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