Sherrie’s independence with regard to these bookkeeping clients

Sherrie, a member, performs various bookkeeping functions for her very small closely held clients including posting cash receipts and disbursements to the client’s general ledger. The client provides Sherrie with copies of check stubs and deposit slips where the client has provided account codes that Sherrie merely records in the general ledger. In addition, on a monthly basis, Sherrie calculates adjusting journal entries for depreciation, amortization, and tax accruals and posts these entries to the client’s general ledger. Which of the following statements is true regarding Sherrie’s independence with regard to these bookkeeping clients?

•  a) Sherrie’s posting of client coded cash receipts and disbursements does not impair independence.
•  b) Sherrie’s posting of adjusting journal entries does not impair independence whether or not she discusses them with the client because these are routine accounting entries that small clients do not understand.
•  c) Neither of the described functions would impair independence under any circumstances.
•  d) None of the above statements is true.

Answer

(C) Neither of the described functions would impair independence under any circumstances

C is correct regarding Sherrie’s independence with regard to these bookkeeping clients since the client wanted Sherrie to compile their accounting records which involved positing the disbursements and cash receipts and adjusting journal entries. The client believed on the competenies and capabilities of Sherrie that is why they engaged her services. Independence is very vital onlt yo the auditor and member of the assurance team since the information of the issues did not mention Sherrie being involved in the assurance team……

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