In which of the following instances would the independence of the CPA not be considered to be impaired? The CPA has been retained as the auditor of a brokerage firm:
A)which owes the CPA audit fees for more than one year.
B)in which the CPA has a large active account.
C)in which the CPA's brother is the controller.
D)which owes the CPA audit fees for current year services and has just filed a petition for bankruptcy.

Question

Quizplus · Accepted Answer

The independence of the CPA would not be impaired in case D because owing audit fees for current year services and filing for bankruptcy does not create a conflict of interest or a financial relationship that would compromise the auditor's objectivity, integrity, or professional skepticism. Choices A, B, and C show situations that could impair the independence of the CPA. Choice A implies a long-term overdue payment that could compromise the auditor's willingness to be rigorous and independent in the audits. Choice B suggests a significant financial interest that could create a self-interest threat to the auditor's ability to maintain an impartial attitude. Choice C reveals a close family member relationship that could give rise to a familiarity threat or undue influence affecting the auditor's judgment.

In Which of the Following Instances Would the Independence of the CPA