incorrect. Policies and procedures established for deciding whether to accept a new client would
not aid in the adequate training of personnel. Personnel management policies would be used to
ensure that training needs are met.
QUESTION: 184
Jackson & Company, CPAs, plan to audit the financial statements of Perigee Technologies, an
issuer as defined under the Sarbanes-Oxley Act of 2002. Which of the following situations would
impair Jackson's independence?

A. Provision of personal tax services to Johnson, the accounts payable manager of Perigee.
B. Preparation of Perigee's routine annual tax return, where Jackson's fee will be calculated as
a percentage of the tax refund obtained.
C. An audit of Perigee's internal control is performed contemporaneously with the annual
financial statement audit.
D. Discovering that Lowe, the chief financial officer of Perigee, started his accounting career ten
years earlier as a staff accountant for Jackson & Company, and continues to maintain ties with
current partners at the firm.

Answer(s): B
Explanation:
Choice "b" is correct. The provision of services involving contingent fee arrangements impairs
the auditor's independence. Choice "a" is incorrect. Personal tax services provided to
employees do not impair the auditor's independence; however, personal tax services provided
to corporate officers or their families would impair independence. Choice "c" is incorrect.
Independence is not impaired by the performance of an audit of Perigee's internal control; in
fact, such services are required by PCAOB Auditing Standard No. 5 (covered in a later class).
Choice "d" is incorrect. The prohibition against auditing companies whose corporate officers
worked for the auditing firm only applies if those officers worked on the audit during the
preceding year.
QUESTION: 185
Which of the following are true regarding communication requirements an auditor must follow
when providing tax services to an audit client who is an issuer under the Sarbanes-Oxley Act of
2002?

I). The auditor must communicate to the audit committee, in writing, regarding the proposed tax
services and related fees.
II). The auditor must communicate to the audit committee, in writing, when the proposed tax
services involve contingent fee arrangements.
III). The auditor must discuss with the audit committee the potential effects of the proposed tax
services on the firm's independence.

A. I and II only.
B. I, II, and III.
C. I and III only.
D. II and III only.

Answer(s): C
Explanation:

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