Which of the following would impair Cpas independence?
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When conducting audits for both issuers and nonissuers, auditors must sustain independence. The auditor must be independent in mind and in appearance. When conducting audits for both issuers and nonissuers, auditors must sustain independence. The auditor must be independent in mind and in appearance. There are several threats to specific engagement circumstances that might impair an auditor from sustaining independence. For this exam, you should be familiar with the
different threats to independence that exist. There are several threats to specific engagement circumstances that might impair an auditor from sustaining independence. Nội dung chính The visual below illustrates the three main types:  Impairment Due to Financial Interests:There are two types of financial interests that could impair an auditor from independence, direct financial interest and indirect financial interest. Direct financial interest will impair an covered member from independence regardless of its materiality. Examples of direct financial interests will include:
Indirect financial interest will impair an auditor from independence if the circumstance is considered material. Examples of indirect financial interest will include:
Impairment due to lending agreements – If a member, or their spouse has a loan to or from the client (e.g., the member is auditing a financial institution in which they have borrowed money). If Client is a Financial Institution: Independence will be impaired if the client is a financial institution (e.g., a bank) if any of the following exists:
Receipt of more than a token gift – by the auditor will impair independence. The code doesn’t explicitly define a token gift, but most public firms define a gift as anything with a value greater than $100. Impairment Due to Employment Relationships:Independence can be impaired if the member currently, previously been employed, or is seeking employment by the client and is currently participating on the client’s engagement. Additionally, the member’s independence can be impaired if the member’s close family member is employed by the client in a key position. Partner professional – independence will be impaired if a partner employee departs from the firm and is subsequently employed by the client in a key position unless the individual is no longer in a position to influence or participate in the firm’s business decisions, and the amount due to the individual is not material to the firm. Former employee – independence will be impaired if the individual has been formerly employed by the client and has participated in the engagement team or is in a position that can influence the engagement when it covers any period of their previous employment with that client. Key position – independence will be impaired if the accountant’s immediate family member or close relative is employed with a client in a key position (e.g., auditor’s mother is the CFO of the firm’s client). Potential employment – independence will be impaired if an individual who is a team member of the engagement team or is in a position to influence the engagement is seeking or discussing potential employment with the client or has been offered a job by the client. However, an exception will arise if the individual notifies the firm and or is removed from the engagement. Impairment Due to Business Relationships:Partners or professional employees of an accounting firm would be subject to an impairment of independence if engaged in specific business relationships with an attest client. This will include those covered members that operate in a management capacity with the client or are responsible for making financial decisions on their behalf. This will include:
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What affects auditors independence?Audit firm size appears to be the most important factor that affects the auditor independence, followed by tenure, competition, audit committee, audit firms providing managerial advisory services and size of audit fee.
Which of the following would be an advocacy threat to a CPA's independence?The seven potential threats to a CPA's independence include the adverse interest threat, advocacy threat, familiarity threat, management participation threat, self-interest threat, self-review threat, and undue influence threat.
Would the independence of the CPA be considered to be impaired with respect to the client?Would the independence of the CPA be considered to be impaired with respect to the client? A. Yes, because the stock would be considered a direct financial interest and, consequently, materiality is not a factor.
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