According to the profession's ethical standards, an auditor would be considered independent in which of the following instances?
A) The auditor's checking account, which is fully insured by a federal agency, is held at a client financial institution.
B) The auditor is also an attorney who advises the client as its general counsel.
C) An employee of the auditor serves as treasurer of a charitable organization that is a client.
D) The client owes the auditor fees for two consecutive annual audits.

Question

Quizplus · Accepted Answer

According to the ethical standards, an auditor is considered independent if there are no financial, business, employment, or personal relationships with the client that may impair their objectivity or create a conflict of interest. In choice A, the auditor's checking account being fully insured by a federal agency does not create a relationship with the client that impairs independence. However, in choices B, C, and D, there is a potential risk of impaired independence due to employment, business, or financial relationships with the client.

According to the Profession's Ethical Standards, an Auditor Would Be