Question

I have a question about Case.
Megan works for a Williams and Co, a smaller CPA firm that has a total of 11 professional staff members, including two partners.
A financial statement attest client has requested the audit firm to prepare tis depreciation schedule. Megan is a new staff member
and will be responsible for this work. The client will have someone with sutiable skills, knowledge and experince to oversee the prepartion
of the depreciation schedule. The audit firm has ducumented its understanding with the client including that the client will take responsiblity for the
depreciation schedule.
Question:
Identify the section in the AICPA Codification that addresses the independence issues associated with the case dacts outline above.
-- Topic 1.200 of the AICPA Code of Professional Conduct requires independence of all engagement conducted by CPA. Is this right answer?
What are the threats to the independence of Williams and Co?
-- I don't understand this question.
What safegurards can Williams and Co put in place so that the firm's independence is not impaired?
--I have hard time understading this question. Williams and Co should be independet from clinet?

I don't understand this Case. Please help me. Thanks.

Answer 1

Answer to Question 1:

Topic 1.200 of the AICPA Code of Professional Conduct requires "a member in public practice to be independent in the performance of professional services as required by standards promulgated by bodies designated by Council"

Further, a member would be considered in violation of the ―Independence Rule if the member cannot demonstrate that safeguards were applied that eliminated or reduced significant threats to an acceptable level.

Answer to Question 2:

Many different relationships or circumstances (or combinations of relationships or circumstances) can create threats to compliance with the ―Independence Rule. It is impossible to identify every relationship or circumstance that creates a threat. Many threats fall into one or more of the following seven broad categories: adverse interest, advocacy, familiarity, management participation, self-interest, self-review, and undue influence.

Answer to Question 3:

When the member applies safeguards to eliminate or reduce significant threats to an acceptable level, as described in paragraph .06c of the ―Conceptual Framework for Members in Public Practice,‖ the member should document the identified threats and safeguards applied. Failure to prepare the required documentation would be considered a violation of the ―Compliance With Standards Rule