An immaterial loan from a covered member to an officer of a client impairs the independence of the CPA.

Question

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According to the AICPA's Code of Professional Conduct, an immaterial loan from a covered member (such as a CPA) to an officer of a client would impair the independence of the CPA, regardless of the amount or terms of the loan. Independence is a fundamental principle of the CPA profession that underlies the credibility and integrity of attest and assurance services. Any lending or borrowing relationship between a CPA and a client's officer or director could create the appearance of a conflict of interest or undue influence on the CPA's objectivity, judgment, or behavior. Therefore, such loans are prohibited under the rules of the AICPA and other regulatory bodies.

An Immaterial Loan from a Covered Member to an Officer