Reference no: EM132817067

Problem 1: Ron Ward, a member, is the sole owner of Ron Ward, CPA. Ron Ward has one bookkeeper and one accounting assistant working with him and neither is a CPA. Ron Ward, CPA prepares compiled financial statements for Packem Manufacturing Company and has done so for the past four years. Joe Packem, the owner of Packem Manufacturing Company, has asked Ron Ward if he has a client or is aware of anybody who would like to purchase some unneeded equipment from the company and has engaged the firm to help him find a buyer for this equipment. As part of the agreement, Packem Manufacturing Company will pay Ron Ward, CPA a commission of 5% of the selling price of the equipment if the firm finds a buyer and the sale is completed. At the present time, no buyer has been found and no sale has been completed. Which of the following statements is true regarding the performance of both the compilation and equipment selling engagements at the same time?

Option 1: Since the receipt of the commission is contingent upon the completion of a sale that has not yet been completed,
there is no conflict between the two engagements and no further action must be taken by Ron Ward, CPA.

Option 2: Ron Ward, CPA cannot perform both of these services at the same time under any circumstances.

Option 3: If Ron Ward, CPA expects or reasonably expects that a third party will use the compiled financial statements, the re- port must disclose the firm's lack of independence.

Option 4: None of the above statements are true.