Independence A
Independence B
Professionalism
Our Principles
To Test or Nonattest
100
True or False: Professional Standards prohibit us from performing audits, reviews, and compilations if we are not independent.
False. We can perform compilations if we disclose our lack of independence in the report. We can't perform audits or reviews.
100
You are buying a new home and want to obtain a mortgage from one of our credit union audit clients. You do not work on any of the credit union audits. Does this create an independence conflict?
No. As long as you are not a "covered member" it doesn't create an independence conflict. A "covered member" includes (1) partners in the engagement partner's office, (2) anyone working on the audit, and (3) anyone providing more than 10 hours of services to the client.
100
Name the international network for accounting firms in which CliftonLarsonAllen is a member.
Nexia
100
What is CLA's mission?
Impactful interactions for success
100
Which of the following investment advisory activities is prohibited under AICPA independence rules? a. Recommending the allocation of funds that a client should invest in various assets. b. Executing a transaction to buy or sell a client’s investment. c. Transmitting a client’s investment selection to a broker-dealer (provided the client has authorized the broker-dealer to execute the transaction). d. Perform record-keeping and reporting of a client’s portfolio balances.
b. Executing a transaction to buy or sell a client’s investment.
200
Your uncle is the CEO of an audit client in your office. You have been assigned to work on the audit. Does this create an independence conflict?
Yes. You should not participate in an audit where you are a relative involved in management. You should inform the partner immediately of the conflict.
200
Under the AICPA independenct rules, "covered members" have to be independent of firm audit clients. Name one of the categories of people that are "covered members" under the AICPA independence rules.
"Covered members" include (1) partners in the engagement partner's office, (2) anyone working on the audit, and (3) anyone providing more than 10 hours of services to the client.
200
Are you responsible to be responsive to individuals inside and outside the firm when away from the office?
Yes. While working at a client location or attending training, you are responsible for periodically checking voice mail, telephone messages, and e-mail during the course of the day
200
How many strategic visions does CLA have?
4
200
T/F: We are permitted to operate a client’s network and also perform their audit.
False. Independence rules prohibit us from performing an audit of a company where we are operating their network.
300
Name 3 professional or regulatory organizations that set independence rules for our profession.
AICPA, State Boards (through licensing), SEC (for entities filing with them), GAO (for audits performed in accordance with their rules) and DOL (for ERISA audits – EBP’s).
300
The owner of an audit client has asked our A/S department to fill in while her bookkeeper has surgery. The owner will approve the invoices. We will print and post checks (including running them through the electronic signature machine). Does this create any independence problems? If so, what?
Yes. We can’t have the ability to execute a transaction and remain independent. Having access to a check signing machine gives us the ability to execute transactions.
300
Are there any circumstances when may we accept a gift from a client?
A gift that is "clearly insignificant" to the recipient may be accepted, if it is a non-cash item of minimum monetary value.
300
You work on the audit of a bank in which you have a car loan. Does this create an independence problem?
No. Car loans are exempted under the independence rules. Also exempted are (1) credit card loans of less than $10,000, (2) loans against an insurance policy, and (3) loans secured by deposits.
300
The owner of an audit client is out of town and has a tax estimate payment due. He calls and asks the partner on the account if the firm can make the payment on his behalf and bill him for it (or he will reimburse us directly) when he returns. Can the partner do this and remain independent?
No. We can’t execute transactions on behalf of a client or make loans to a client. The materiality of the amounts involved does not change the answer.
400
Yes/No – The wife of one of the partners in your office is on the board of the local Arts Council. We have been asked to propose on the audit of the Council. Is the firm independent to perform this audit?
No. The firm can not perform the audit of any entity where a partner or employee (or their spouse), in any office, is on the board.
400
The wife of a tax partner in your office is the assistant controller for a client that needs an audit. She handles A/R, prepares the monthly bank reconciliation and prepares the F/S’s. She is supervised by the controller, so she doesn’t have ultimate responsibility for the areas in which she’s involved. Can we perform the audit?
No. The wife has significant accounting responsibility so she is in a key accounting position. We can’t perform audit work when an immediate family member of a partner (or any other covered member) is in a key accounting position.
400
Your client’s business attire is casual (i.e. jeans and a golf shirt). What is the appropriate attire for the audit team?
If a client has a more liberal dress code policy, then you should follow our policy of professional dress unless otherwise requested by the client.
400
A GAO audit client wants CLA to install new general ledger software. Your office installs such software. Can we perform the software installation for a GAO audit client?
No. GAO independence rules prohibit us from installing accounting software for an audit client. We can provide them training and advice as long as we present them with two software options. We have policies and forms that are applicable whenever nonaudit services are performed for GAO audit clients.
400
Our audit independence is always impaired if we assist in drafting financial statements for: a. A nonpublic audit client b. A public audit client c. Either a nonpublic or public audit client d. Neither a nonpublic audit client
b. A public audit client
500
Our audit independence is always impaired if we assist in drafting financial statements for: a. A nonpublic audit client b. A public audit client c. Either a nonpublic or public audit client d. Neither a nonpublic audit client
b. A public audit client
500
An audit client is purchasing a life insurance policy on one of their owner’s lives. If he dies, the company will buy his stock from his family using the proceeds of the insurance policy. He wants to purchase the policy through CLA Wealth Advisors. Does this create any independence issues?
Yes. We can’t receive a commission from an audit client and remain independent. This is the case even if the insurance is purchased through CLA Wealth Advisors and not CLA.
500
Name three items Not Appropriate to wear in a business casual office environment.
• Jeans (any color) •Miniskirts •T-shirts or Sweatshirts (including sport team items) •Anything with a printed slogan •Cropped tops •Sweatsuits/Jogging Suits/Athletic Wear •Shorts (including dress shorts) •Tank tops/Halter tops •Anything see-through, tight-fitting , or low-cut •Tennis shoes •Hiking boots
500
What is the CLA Foundation?
The CLA Foundation is an extension of the CLA Promise to the broader community. Their mission is to promote and support diverse individuals and organizations by connecting networks, advancing career readiness and creating career opportunities.
500
If you are on an audit engagement team and are offered employment or seek employment with the client, you are required to do two things. Name one of them.
(1) Promptly report the situation to the engagement partner, (2) Remove yourself from the engagement and remain separated from the engagement until the negotiations end.
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