A key factor that an auditor provides is independence. The codes of professional conduct typically state that a member in public practice should be independent in fact and appearance when providing auditing and other attestation service.

Required:

Do you consider the following circumstances to suggest a lack of independence? Justify your position. (Use your imagination. Specific answers are not provided in the chapter.)

1. James Slater is a partner with a large audit firm and is assigned to the CGI audit. James owns 10 shares of CGI.

2. Maria Tsoukas has invested in a mutual fund company that owns 100,000 shares of Sears Canada Inc. She is the auditor of Sears.

3. Bob Fisher is a clerk/ typist who works on the audit of the Bank of Montreal. He has just inherited 70,000 shares of the Bank of Montreal. (Bob enjoys his work and plans to continue despite his new wealth.)

4. Nancy Chen worked on weekends as the controller for a small business that a friend started. Nancy quit the job in midyear and now has no association with the company. She works full- time for a large accounting firm and has been assigned to do the audit of her friend’s business.

5. Sylvia Bertone borrowed $ 100,000 for a home mortgage from First City National Bank. The mortgage was granted on normal credit terms. Sylvia is the partner in charge of the First City audit.