AICPA 4-18

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  1. When does the SEC consider independence impaired?
    • You are not independent in fact
    • A reasonable investor would conclude that you would not be capable of acting without bias
  2. SEC may look to four basic principles in evaluating independence
    • Does the relationship create a mutual or conflicting interest?
    • Does it place the firm in a position where it will audit its own work
    • Does the firm effectively act as management/employee of the client
    • Does it place the firm in a position where it acts as an advocate for the client
  3. Difference between AICPA and SEC rules concerning jointly-held investments
    • AICPA: impaired if investment is material to covered member's net worth
    • SEC: materiality doesn't matter
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AICPA 4-18
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