AICPA Code of Professional Conduct,Rule 101
Livingston and Associates Is $W$

question 29

Essay

AICPA Code of Professional Conduct,Rule 101
Livingston and Associates is a CPA firm in Las Vegas,Nevada and it performs the financial statement audit for Smith Plastics,Inc.For each non-related situation below,determine if each individual represented is independent of Smith Plastics and if Livingston and Associates (the Firm)is independent of Smith Plastics:
A.Sam Livingston, an audit paitner, meets Jill $W$ amer, $C F O$ of Sminth Plastics after the engagement begins and they fall in love. Sam and Jill mary in Lake T ahoe, California a short time later. Sam Livingston will not be on the auclit engagement team of Smith Plastics.

B.The Firm hires Billy Messer as a staff auditor. Billy is aware that hisfather has a material investment in Smith Plastics. Billy will no work on the Smith Plastics audit.

C.Lucy Brown is an audit manager at the Firm. Bob, her high school aged son, owns $1 \%$ of the equity of Smith Plastics. The investment is not material to Bob or Lucy's net worth. Lucy is assigned as the aucht manager for the Smith Plastics engagement.

D. Sinith Plastics has paid all but $\$ 5,000$ of the previous ye ars audit fees.

E.Julie Simpson, tax partner at the Firm has a 401k plan with multiple securities maling up the balance. One of the securities in the plan is that of Smith Plastic swhich comprises .05\% of the total balance of Julie's $401 \mathrm{k}$ . Julie does not have a significant portion of her retirement or savings in this particular plan

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Definitions:

Monopolistic Competition

Market in which firms can enter freely, each producing its own brand or version of a differentiated product.

Monopoly

A market structure characterized by a single seller controlling the entire supply of a unique product or service, without close substitutes.

Differentiated Products

Goods or services that are distinguished from similar products by characteristics like quality, features, or brand identity, leading to non-price competition.

Monopolistically Competitive

A market structure in which many firms sell products or services that are similar but not identical, allowing for competition on factors other than price.