In which of the following circumstances would a CPA who audits XZ Corporation lack independence?
A)The CPA and XZ's president are both on the Board of Directors of COD Corporation.
B)The CPA and XZ's president each own 25% of FOB Corporation,a closely held company.
C)The CPA has an automobile loan from XZ,a financial institution.The loan is collateralized by the automobile.
D)The CPA reduced XZ's usual audit fee by 40% prior to the audit because XZ's financial condition was unfavorable.

Question

Quizplus · Accepted Answer

The CPA would lack independence if they and XZ's president each own 25% of FOB Corporation, as this creates a significant mutual financial interest that could impair the CPA's objectivity.

In Which of the Following Circumstances Would a CPA Who