For Each of the Following, Indicate If There Is a Threat

question 44

Essay

For each of the following, indicate if there is a threat to independence. If so, state the threat and a possible safeguard.
a) J.P. Schultz, CPA is unaware that his audit client, Cold Creek Spa Co. makes up 20% of J.P. Schultz firms revenues.
b) Luca Lobo goes to his assurance client, Joe's Auto Mart to buy a used car for his daughter. Due to their business relationship, Joe offers James a vehicle below cost.
c) Leslie Jacko has been auditing Joe's Pool and Spa Limited for many years. Joe's Pool and Spa Limited has been experiencing financial difficulties and has not been able to pay its audit fees for the last three years. Joe's now owes Leslie Jacko $50,000 in assurance fees.
d) Peter Razo has three review engagements. One of the review engagements is done for Hugo's Meatshop Ltd., which is 80% owned by Peter's father-in-law, Igor Slovlog. The remaining 20% of the Meatshop is owned by Igor's four children.

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Definitions:

Latino Population

Refers to the demographic group of people in a given area who originate from Latin America or are of Latin American descent.

Los Angeles County

A region in Southern California, known as the most populous county in the United States, home to Los Angeles city and a diverse population.

Non-Hispanic White

A term used in the United States to refer to people who identify as white and are not of Hispanic or Latino origin.

Federal Deficit

The financial shortfall when a government's expenditures exceed its revenues within a given fiscal year, leading to increased national debt.