A direct financial interest violates independence in which of the following circumstances?
A) when close relatives such as nondependent children, brothers, and sisters have a significant financial interest in the client
B) when close relatives such as nondependent children, brothers, and sisters have any financial interest in the client
C) when the CPA owns shares in a mutual fund that has an ownership interest in the client
D) when close relatives such as a brother, sister, or in-laws are employed by the client in their engineering department

Question

Quizplus · Accepted Answer

A direct financial interest violates independence when close relatives such as nondependent children, brothers, and sisters have a significant financial interest in the client. This is because such financial interest may impair the CPA's independence or create the appearance of lack of independence. The other options may not necessarily result in impaired independence, as ownership in a mutual fund does not necessarily create a direct financial interest, and having close relatives employed by the client may not necessarily affect the CPA's objectivity or integrity.

A Direct Financial Interest Violates Independence in Which of the Following