for each of the following scenarios, please indicate whether or
for each of the following scenarios, please indicate whether or not independence-related sec rules are being violated, assuming that the audit client is a public company. brieﬂy explain why or why not.a. adrian reynolds now works as a junior member of the accounting team at swiss precision tooling, a publicly traded manufacturing company. three months ago, he worked as a staffauditor for crowther & sutherland, a local accounting ﬁrm, where he worked on the swiss precision tooling audit team. crowther & sutherland is still the auditor for swiss precision tooling.b. susana millar ﬁnished working for bircham, dyson & bell in august 2004. during that time, she was a concurring partner on the unigate dairies task (the engagement period on this audit ended in april 2005). in february 2006, susana took up a position as controller of unigate dairies. bircham, dyson & bell is still the dairy’s auditor and plans to finish its current audit task in march 2006 (19 months after susana left the ﬁrm).c. janay butler, a senior auditor, is aware that under sec rules her accounting ﬁrm should not conduct appraisal or valuation services for a public company audit client. however, her manager has requested that she appraise some specific large inventory items to verify a public client’s estimates, which are relied upon by others.d. greg larsen has been working ﬁve full years as the lead partner on the audit of a subsidiary of comet electrical co., the publicly held parent company. the subsidiary makes up 30 percent of comet’s annual revenue. beginning this year, greg’s cpa ﬁrm will also conduct the parent company’s audit. greg will work on the audit of the parent company, but not as lead partner. can greg continue to work as lead partner on the subsidiary? can he work as a nonlead partner on the parentcompany audit? e. heath & associates, cpas, is the auditor of halifax investments, inc., a public company. heath makes most of its money by selling nonaudit services to its audit clients, but it ensures every service it provides for halifax is in accordance with sec rules and is preapproved by the company’s audit committee. last year, it billed the following to halifax: audit fees $0.8 million, tax fees $2.3 million, and other fees $5.2 million. no services prohibited by the sec were provided by heath to halifax, and the fee ﬁgures are appropriately disclosed in halifax’s ﬁnancial statements.
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