A CPA recently inherited $400,000 of stock outstanding in one of her audit clients.In an attempt to maintain her independence,she placed her holdings of this audit client's stock into a trust.The trust is managed by a well-known independent trustee,JP Bankers Trust Services.The CPA's two young children are the sole beneficiaries of this trust.The CPA:
A) Successfully has maintained her independence because none of the trust's assets directly benefit her
B) Successfully has maintained her independence because she does not have control of these assets
C) Has not maintained her independence because of the serious self-review threat presented
D) Has not maintained her independence because she still is considered to have an interest in her audit client

Question

Quizplus · Accepted Answer

The CPA has not maintained her independence because she still has a beneficial interest in the audit client through her children, who are the beneficiaries of the trust.

A CPA Recently Inherited $400,000 of Stock Outstanding in One