The case of Mick's participant son
Charles Selcer, CPA, MBA | February/March 2017 Footnote
Emo Franco owns General Lease Emo Franco, Inc., a farm equipment leasing company. The company's financial statements are audited by Hickory, Dickory & Dock CPAs (HDD). In 2016, the company's profit-sharing plan reached the point where the plan needed to have an audited financial statement. One of HDD's partners, Mick Dickory, has a dependent son, Dick Dickory, who works at Emo's company and is a participant in the profit-sharing plan?
Q. Can HDD be independent and audit the plan?
A. Yes, if:
- The son is not in a key position at the company.
- All employees are given the opportunity to participate in the plan.
- The son is not a trustee.
- The son does not supervise or participate in the plan investment decisions or selection of investment options.
(See ET 1.270.030.01)