Reference no: EM132571526

Question - For the following 2 scenarios, perform the following analysis:

a. Indicate whether or not the facts present a threat to independence. Yes or No?

b. If it is an independence threat, indicate the type of independence threat.

c. Provide an explanation for your conclusion as to why or why not the facts in the scenario would impair the CPA's professional judgment or objectivity.

Scenario 1 - Jon Davis, CPA, is a former partner at Tick and Bop, LLP. He left the firm immediately to work for Widget Manufacturing Inc., an audit client of Tick and Bop. Since Davis was the only expert in Tick and Bop on not-for-profit clients, Tick and Bop pays him as a consultant when they have questions related to their not-for-profit clients.

Scenario 2 - Bob Applegate, CPA, is a partner with Wells Largo, LLP, and had been providing tax and assurance services to Mia Logenta for 10 years. Ms. Logenta and some of her colleagues had recently incorporated ABC Company and invited Bob to participate as a shareholder and a director. Bob declined to be a director because of the possible conflict of interest but agreed to be a shareholder with only a 10% ownership, which he argued was not material. Ms. Logenta recommended Bob to perform the audit. The other shareholders and the bank agreed to appoint Bob as the auditor and Bob accepted.