Question

Your firm has three offices: Traverse City, MI, Des Moines, IA, and Noblesville, IN. The Traverse City office is auditing Great Fruit Lodge. Which of the following individuals is NOT a covered member with respect to the Great Fruit Lodge audit?

1) A partner in the Traverse City office that does not provide services to the Great Fruit Lodge engagement.
2) The manager on the Great Fruit Lodge engagement.
3) The quality review partner for the Great Fruit Lodge engagement.
4) A partner in the Des Moines office that does not provide services to the Great Fruit Lodge engagement.

Answer 1

The individual not considered a covered member for the Great Fruit Lodge audit is a partner in the Des Moines office who does not provide services to the Great Fruit Lodge engagement.

Step-by-step explanation:

The individual who is NOT a covered member with respect to the Great Fruit Lodge audit is:

1. A partner in the Traverse City office that does not provide services to the Great Fruit Lodge engagement.
2. The manager on the Great Fruit Lodge engagement.
3. The quality review partner for the Great Fruit Lodge engagement.
4. A partner in the Des Moines office that does not provide services to the Great Fruit Lodge engagement.

According to the AICPA Code of Professional Conduct, a covered member includes individuals who are on the engagement team, those who are in a position to influence the engagement, and partners or managers who provide a material amount of non-audit services to the audit client. In this scenario, partners and staff in a different office that do not work on, or are not in a position to influence, the audit engagement for Great Fruit Lodge and do not provide a material amount of non-audit services to that entity would not be considered covered members.