Steve Morris, CPA, Performs Audits for Nonpublic Clients

question 57

Essay

Steve Morris, CPA, performs audits for nonpublic clients. Describe the independence obligations of Steve that apply to the performance of professional services for audit clients.

---

Definitions:

Fiscal Period

A specific time period for which a company prepares financial statements, typically a year or quarter.

Adjusted Trial Balance

A list of all accounts and their final balances after adjustments, used to prepare financial statements.

Income Summary Account

A temporary account used to accumulate all income and expense accounts before transferring the net amount to retained earnings at the end of an accounting period.

Retained Earnings

The portion of net earnings not distributed as dividends to shareholders, but retained by the company to be reinvested in its core business or to pay debt.