An auditor's independence would not be considered impaired if she or he had
A) Owned common stock of the audit client but sold it before the company became a client.
B) Sold short the common stock of an audit client while working on the audit engagement.
C) Served as the company's treasurer for six months during the year covered by the audit but resigned before the company became a client.
D) Performed the bookkeeping and financial statement preparation for the company, which had no accounting personnel and for which the president had no understanding of accounting principles.

Question

Quizplus · Accepted Answer

Owning common stock in an audit client does not necessarily impair independence, as long as the stock was sold before the company became a client.

Answer: D 
 Performing bookkeeping and financial statement preparation services does impair independence, but the fact that the president had no understanding of accounting principles may mitigate this impairment. The auditor should still consider whether there are any other factors that might impair independence.

Therefore, the best choice is either A or D, depending on the situation.

An Auditor's Independence Would Not Be Considered Impaired If She