AICPA Quiz 4/4
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Generally a member of your immediate family may be employed by an attest client without impairing your independence as long as he/she does not hold a _____ poisition.
an individual who has primary responsibility for significant accounting functions that support material components of the financial statements; has primary responsibility for preparing the financial statements; or can exercise influence over the content of the financial statements LOOK AT RESPONSIBILITIES
Employment of your close relatices is subject to some restrictions if you are a covered member because you are
- on the client's attest engagement team
- able to influence the attest engagement
- a partner in the office with the lead engagement partner
Close relatives include
- your non-dependent children
- your brothers and sisters
- your parents
- immediate family
the only covered members excluded from the close relative issues are those who are covered members because they provide
Independence is required when you perform
- financial statement audits
- financial reviews
- other attestation services as defined in the attestation standards.
Independence is not required if you perform only:
- A compilation (must disclose non independence)
- Tax preparation and advice that is not part of a financial statement audit or review
- Financial Planning
- Other Consulting Services
Periods during which independence is required
- Begins when a firm accepts a new attest client
- Continues through professional engagemtn
- Ends when the firm or client terminates the professional engagement
Independence is considered impaired if a covered member has a _____ _____ ____ in an attest client
direct financial interest
There is no ______ threshold. Any amount of direct investment impairs independence.
Independence is considered impaired if a covered member has a ______ ____ financial interest in an attest client. --must be material to the covered member's net worth before it is considered to impair independence. --no qualitative benchmark --requires judgment and includes both quantitative and qualitative factors
Investment would be considered a direct financial interest if:
- The covered member supervised or participated in the limited partnership's investment decisions
- The covered member was a general parter rather than a limited partner in the limited patnership.
Owning shares in a mutual fund is
- a direct financial interesti n the mutal fund AND
- an indirect financial interest in the companies whose stock make up the mutual fund portfolio
If you acquire a financial interest unexpectedly through gift or inheritance, independence is not considered impaired as long as
you dispose of the financial interest as soon as practiable but no later than 30 days after you become aware of the interest and have the right to dispose of it.
What would you like to do?
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