Group Paper Coca Colla Industry Analysis

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Week two homework

4-8 Explain how the rules concerning stock ownership apply to partners and professional staff. Give an example of when stock ownership would be prohibited for each.

. A partner can own stock in an audit client in one of these conditions:
(1) He or she cannot influence the audit engagement and (2) he or she is not in the same office as the partner responsible for the audit engagement.

A professional staff member cannot own stock in an audit client if he or she is assigned to the engagement or if he or she becomes a partner in the office of the partner responsible for the audit engagement. A professional staff member can own stock in a firm’s audit client as long as he or she does not participate in the audit engagement.

A partner in the office of the partner responsible for an audit engagement cannot own stock in that audit client

Partner violation: A partner in the San Francisco office owns one share of stock of a client whose audit is conducted by a different partner in the San Francisco office.

Professional staff violation: An audit manager owns stock in a client whose audit is performed by the office where the audit manager works. The manager is promoted to partner mid-year. As soon as the manager becomes a partner, there is a violation of Rule 101.

4-18

A) Correct answer is (1)
B) Correct answer is (3)
C) Correct answer is (1)

4-19
A) Correct answer is (1)
B) Correct answer is (3)
C) Correct answer is (2)

4-20
The following situations involve the provision of nonaudit services. Indicate whether providing the service is a violation of AICPA rules or SEC rules including Sarbanes–Oxley requirements on independence. Explain your answer as necessary.

a. Providing bookkeeping services to a public company. The services were preapproved by the audit committee of the company.

Yes there is a violation.

b. Providing internal audit services to a public company...
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