A CPA Recently Inherited $400,000 of Stock Outstanding in One

question 27

Multiple Choice

A CPA recently inherited $400,000 of stock outstanding in one of her audit clients.In an attempt to maintain her independence,she placed her holdings of this audit client's stock into a trust.The trust is managed by a well-known independent trustee,JP Bankers Trust Services.The CPA's two young children are the sole beneficiaries of this trust.The CPA:

• A) Successfully has maintained her independence because none of the trust's assets directly benefit her
• B) Successfully has maintained her independence because she does not have control of these assets
• C) Has not maintained her independence because of the serious self-review threat presented
• D) Has not maintained her independence because she still is considered to have an interest in her audit client

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Definitions:

β Value

A parameter in statistical models, especially regression analysis, representing the slope of the line of best fit or the degree of change in the dependent variable for a one-unit change in an independent variable.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, commonly denoted by alpha (α) and used to measure the strength of evidence against the null hypothesis.

α

Typically represents the level of significance in hypothesis testing, indicating the probability of rejecting the null hypothesis when it is actually true.

β Recalculate

A statistical process of re-estimating the beta coefficient in finance or regression models, adjusting for changes in variables or data.