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The firm of McGraw and West, CPAs, has two offices, one in Phoenix and one in San Diego. The firm has audited the Cameron Corporation
out of its Phoenix office for the past five years. For each of the following independent cases, which occurred during the year under audit, indicate whether the independence of either (a) the CPA involved or (b) the firm would be impaired.
a. Mary McGraw, a partner in the San Diego office, fell wildly in love with Bill Smith, the treasurer for Cameron Corporation.
They were married in Las Vegas. During the week, McGraw still lives in San Diego and works in that office, while Bill Smith lives in Phoenix, working for Cameron. On weekends they commute to their home in Yuma. Mary does not participate in the engagement.
b. Jim West is the father of Will West, a Phoenix partner. Jim West has a material investment in Cameron. Will West is unaware of his father’s investment, but does participate in the engagement.
c. Bill Johnson, a senior in the San Diego office, has a material investment in the capital stock of Cameron. He does not participate in the engagement.
d. Sandra Steversen, a staff assistant in the Phoenix office, works on the Cameron audit. Her uncle works as the chief accounting officer for Cameron.
e. Bill Adams, a senior in the Phoenix office, does not work on the Cameron audit, but owns 9 percent of Cameron’s outstanding equity (common stock).
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