YOUCPA is a regional CPA firm engaged in public audit work ofsmall- and medium-size firms in the Midwest. The YOUCPA firm hastheir main office in Chicago, Illinois, and regional offices inMinneapolis, Minnesota and Indianapolis, Indiana. The managingpartners are located in Chicago. YOUCPA also provides taxpreparation and information consulting to customers and is anapproved PCOAB audit firm.
Your client, the publicly traded Fresno Freezer Corporation, islocated in Elgin, Illinois, a small city located outside ofChicago. The client has the main plant there and has distributioncenters in Indianapolis and Minneapolis.
The Fresno Freezer Corporation has contracted with YOUCPA for anaudit. During the audit, the audit team has asked you to determineif everyone on the engagement team is independent.
The following individuals are on the engagement team and on themanagement of YOUCPA:
Sarah Ball, Senior Partner, YOUCPA
Bill Davis, Managing Partner, YOUCPA
David Youssef, Manager of Taxation Services, YOUCPA
Yewel Faraday, Manager of Information Consulting, YOUCPA
Frank Bell, Supervisor of Auditing assigned to Client,YOUCPA
Beth Wright, Supervisor of Auditing assigned to Client,YOUCPA
Wilbur Singation, Auditor, YOUCPA
Sam Martin, Auditor, YOUCPA
Mary Franks, Auditor, YOUCPA
Phil Cole, Auditor, YOUCPA
Callie Smart, Auditor, YOUCPA
You, Auditor, YOUCPA
Background of each individual:
The following individuals are on the engagement team and on themanagement of YOUCPA:
Sarah Ball, Senior Partner, YOUCPA
Manages the YOUCPA partnership
No financial interest in client
No relative with firm
No past history working with client in a direct manner (meaningworking for the client as an employee)
Bill Davis, Managing Partner, YOUCPA
Managing the audit of the client
No financial interest in the client
No relative with the firm
No past history working with the client in a direct manner
David Youssef, Manager of Taxation Services, YOUCPA
Manages the taxation services for the accounting firm
No financial interest in the client
No relative with the firm
No past history working with the client in a direct manner
Yewel Faraday, Manager of Information Consulting, YOUCPA
Manages the information consulting for the accounting firm
Yewel has no financial interest in the client
No relative with the client in a direct manner
Frank Bell, Supervisor of Auditing assigned to Client,YOUCPA
Will supervise the audit at the main plant
No financial interest in the client
Wife works with client as a worker in the plant
Wife has no control or influence on the impact or creation ofthe financial statements
Wife has been working there for 20 years
Beth Wright, Supervisor of Auditing assigned to Client,YOUCPA
Will be auditing the distribution locations
No financial interest directly in the client
Does own a mutual fund that is invested in the client
Mutual fund estimated value is 0.01% of the total value of thestock market value of the client
Mutual fund makes all decisions on who, when, and how much theyinvest in corporations
Total investment in the mutual fund is $1,000
Wilbur Singation, Auditor, YOUCPA
No financial interest in the client
No relative with the client
No past history working with the client in a direct manner
Has contacted a head hunter looking for a new, betterposition
Head hunter has discussed his qualifications with many firms,discreetly
Wilbur does not know the firms or the content of thosediscussions
Sam Martin, Auditor, YOUCPA
No financial interest in the client
Cousin works with the client in a role as the mail distributionperson
Cousin handles the mail
Conversation with cousin has been rough in the past over a smalldebt the cousin still will not pay
The amount of the debt is $500
Mary Franks, Auditor, YOUCPA
No financial interest in the client
No relative with the client
No past history working with the client in a direct manner
Phil Cole, Auditor, YOUCPA
Recently joined the team
Used to work at the client less than a year ago
Was responsible for financial planning and control
Left to experience the auditing profession
Callie Smart, Auditor, YOUCPA
Just graduated from a prestigious online university inIllinois
No relative or any direct relationship to the client
No investment in the client
You, Auditor, YOUCPA
No investment in the client
No past working relationship with the client in a directmanner
No relatives working at the client
Assignment Guidelines:
For each individual on the engagement team and on the managementof YOUCPA, complete the following:
Determine if they are or are not independent.
Explain your reasoning.
YOUCPA is a regional CPA firm engaged in public audit work ofsmall- and medium-size firms in the Midwest. The YOUCPA firm hastheir main office in Chicago, Illinois, and regional offices inMinneapolis, Minnesota and Indianapolis, Indiana. The managingpartners are located in Chicago. YOUCPA also provides taxpreparation and information consulting to customers and is anapproved PCOAB audit firm.
Your client, the publicly traded Fresno Freezer Corporation, islocated in Elgin, Illinois, a small city located outside ofChicago. The client has the main plant there and has distributioncenters in Indianapolis and Minneapolis.
The Fresno Freezer Corporation has contracted with YOUCPA for anaudit. During the audit, the audit team has asked you to determineif everyone on the engagement team is independent.
The following individuals are on the engagement team and on themanagement of YOUCPA:
Sarah Ball, Senior Partner, YOUCPA
Bill Davis, Managing Partner, YOUCPA
David Youssef, Manager of Taxation Services, YOUCPA
Yewel Faraday, Manager of Information Consulting, YOUCPA
Frank Bell, Supervisor of Auditing assigned to Client,YOUCPA
Beth Wright, Supervisor of Auditing assigned to Client,YOUCPA
Wilbur Singation, Auditor, YOUCPA
Sam Martin, Auditor, YOUCPA
Mary Franks, Auditor, YOUCPA
Phil Cole, Auditor, YOUCPA
Callie Smart, Auditor, YOUCPA
You, Auditor, YOUCPA
Background of each individual:
The following individuals are on the engagement team and on themanagement of YOUCPA:
Sarah Ball, Senior Partner, YOUCPA
Manages the YOUCPA partnership
No financial interest in client
No relative with firm
No past history working with client in a direct manner (meaningworking for the client as an employee)
Bill Davis, Managing Partner, YOUCPA
Managing the audit of the client
No financial interest in the client
No relative with the firm
No past history working with the client in a direct manner
David Youssef, Manager of Taxation Services, YOUCPA
Manages the taxation services for the accounting firm
No financial interest in the client
No relative with the firm
No past history working with the client in a direct manner
Yewel Faraday, Manager of Information Consulting, YOUCPA
Manages the information consulting for the accounting firm
Yewel has no financial interest in the client
No relative with the client in a direct manner
Frank Bell, Supervisor of Auditing assigned to Client,YOUCPA
Will supervise the audit at the main plant
No financial interest in the client
Wife works with client as a worker in the plant
Wife has no control or influence on the impact or creation ofthe financial statements
Wife has been working there for 20 years
Beth Wright, Supervisor of Auditing assigned to Client,YOUCPA
Will be auditing the distribution locations
No financial interest directly in the client
Does own a mutual fund that is invested in the client
Mutual fund estimated value is 0.01% of the total value of thestock market value of the client
Mutual fund makes all decisions on who, when, and how much theyinvest in corporations
Total investment in the mutual fund is $1,000
Wilbur Singation, Auditor, YOUCPA
No financial interest in the client
No relative with the client
No past history working with the client in a direct manner
Has contacted a head hunter looking for a new, betterposition
Head hunter has discussed his qualifications with many firms,discreetly
Wilbur does not know the firms or the content of thosediscussions
Sam Martin, Auditor, YOUCPA
No financial interest in the client
Cousin works with the client in a role as the mail distributionperson
Cousin handles the mail
Conversation with cousin has been rough in the past over a smalldebt the cousin still will not pay
The amount of the debt is $500
Mary Franks, Auditor, YOUCPA
No financial interest in the client
No relative with the client
No past history working with the client in a direct manner
Phil Cole, Auditor, YOUCPA
Recently joined the team
Used to work at the client less than a year ago
Was responsible for financial planning and control
Left to experience the auditing profession
Callie Smart, Auditor, YOUCPA
Just graduated from a prestigious online university inIllinois
No relative or any direct relationship to the client
No investment in the client
You, Auditor, YOUCPA
No investment in the client
No past working relationship with the client in a directmanner
No relatives working at the client
Assignment Guidelines:
For each individual on the engagement team and on the managementof YOUCPA, complete the following:
Determine if they are or are not independent.
Explain your reasoning.
