Jeffrey Wang, a CPA and an auditor, makes the following comment,“The audit process is all about gathering evidence. A key part ofthe process is to gather evidence efficiently and effectively.”What exactly does Jeffrey mean by this comment?

Question 2

You have been asked by the accounting teacher at the local highschool to explain to students interested in accounting why societyneeds auditors. Briefly outline your response.

Question 3

Required

For each of the following independent situations, state whetherthe CPA has violated the CHARTERED PROFESSIONAL ACCOUNTANTS OFONTARIO Professional Rules of Conduct and/or Independence Standard,and explain your reasoning.

a. Emily, CPA, owns a material amount of units in a mutual fundthat owns stock in Emily’s largest audit client. Reading the mutualfund’s most recent financial report, Emily learned that the mutualfund significantly increased its holdings in her client.

b. Martha, CPA, has a practice with two departments. Onedepartment performs assurance services and the other performsbookkeeping services. One of her publicly accountable audit clientslost its controller and the bookkeeping department providedcontrollership services for 30 days while the company searched fora new controller. As this was an emergency, it was necessary forMartha’s firm to provide the service because it has an intimateknowledge of the client’s system.

c. Emma, CPA, is the auditor for Nestco (a public company) andrecommends that the company improve its internal controls. Sheaccepts a 90-day engagement to design and implement new controlsand to train company staff on them.

d. Harry, a CPA student, is currently employed by a CPA firm inpublic practice. He accepts a 15% discount on purchases from anaudit client. Harry believes that he has not violated the Rules ofConduct because he is not yet a CPA member and the discount is atthe same percentage that is available to the client’s own staffmembers.

e. Irene, CPA, provides various services for Simply FashionInc., a privately held company. She completes all of Simply FashionInc.’s tax work, including preparing the annual corporate taxfiling and performing tax consulting services. Recently SimplyFashion Inc. began negotiations for a new bank loan, and acondition of the loan is that Simply Fashion must provide the bankwith audited financial statements on an annual basis. SimplyFashion has asked Irene to complete the annual audit and tocontinue to perform the tax services she already performs. Ireneaccepted the engagement, and in order to improve audit efficiency,she has assigned the team that completes the tax work to thefinancial statement audit.