Assignment Choice #1: Auditors' Independence You are the partner-in-charge of a large metropolitan office of a regional public accounting firm. Two members of your professional staff have come to you to discuss problems that may affect the firm's independence. Neither of these situations has been specifically answered by the AICPA Professional Ethics Division. Therefore, you must reach your own conclusions as to what to advise your staff members, and what actions, if any, are to be taken by the firm. Case 1: Don Moore, a partner in the firm, has recently moved into a condominium that he shares with his girlfriend, Joan Scott. Moore owns the condominium and pays all the expenses relating to its maintenance. Otherwise, the two are self-supporting. Scott is a stockbroker, and recently she has started acquiring shares in one of the audit clients of this office of the public accounting firm. The shares are held in Scott's name. At present, the shares are not material in relation to her net worth. Case 2: Mary Reed, a new staff auditor with the firm, has recently separated from her husband. Mary has filed for divorce, but the divorce cannot become final for at least five months. The property settlement is being bitterly contested. Mary's husband has always resented her professional career and has just used community property to acquire one share of common stock in each of the publicly owned companies audited by the office in which Mary works. For each case, you are to: a. Set forth arguments indicating that the firm's independence has not been impaired. b. Set forth arguments indicating that the firm's independence has been impaired. c. Express your personal opinion. Identify those arguments from part (a) or part (b) that you found most persuasive. If you believe that the firm's independence has been impaired, make suggestions about how the problem might be resolved. Your paper should be 3-4 pages in length.. Include a title page and reference page. Use two outside academic sources other than the textbook, course materials, or other information provided as part of the course materials
Submit responses in MSWord as one document. Label each section clearly. If using an Excel spreadsheet for question 2, please copy and paste the spreadsheet into the Word document.
1. How is an impairment loss on property, plant and equipment determined and measured under IFRS? How does this differ from US GAAP?
2. Please determine the amount at which the inventory should be reported on December 31 Year 1 balance sheet using the following information:
Historical cost
$20,000
Replacement cost
Replacement cost
$14,000
Estimated selling price
Estimated selling price
$17,000
Estimated costs to complete and sell
Estimated costs to complete and sell
$2,000
Normal profit margin as a percentage of selling price
Normal profit margin as a percentage of selling price
20%
The entire inventory on hand at December 31, Year 1 was completed in Year 2 at a cost of $1,800 and sold at a price of $17,150.
3. Determine the impact on income in Year 1 and Year 2 under (1) IFRS and (2) US GAAP.
