According to the profession's ethical standards, a CPA would be considered independent in which of the following instances?
A)A client leases part of an office building from the CPA, resulting in a material indirect financial interest to the CPA.
B)The CPA has a material direct financial interest in a client, but transfers the interest into a blind trust.
C)The CPA owns an office building and the mortgage on the building is guaranteed by a client.
D)A client has not paid CPA fees from a 3ʳᵈ Quarter review just prior to the annual audit.

Question

Quizplus · Accepted Answer

The CPA's independence is not considered impaired by a client's unpaid fees for services rendered in the 3ʳᵈ Quarter review just prior to the annual audit, as long as such fees are not for audits or other assurance services for prior periods and do not remain unpaid for a long time, typically one year. Options A, B, and C involve financial relationships that could impair independence.

According to the Profession's Ethical Standards, a CPA Would Be