Jay Rich, CPA, holds 10% of the stock in Rothenburg Construction Company. The board of directors...
Jay Rich, CPA, holds 10% of the stock in Rothenburg Construction Company. The board of directors of Rothenburg ask Rich to conduct its audit. Is there an issue with Rich conducting the audit and if so, what is the issue?
Homework Answers
Solution:
Yes, there is issued with Rich conducting the audit. The issue is related to independence in audit as Jay rich is holding 10% of stock in the company.
Shareholders of the company can not be the auditor of that company, it will result in professional misconduct as per CPA guidelines.
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Jay Rich, CPA, holds 10% of the stock in Rothenburg
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