A "covered member" of a CPA firm owns 4% of the bonds outstanding in an audit client.In accordance with the Independence Rule,does this CPA firm have the independence to audit this client?

Question

Quizplus · Accepted Answer

According to the Independence Rule, owning any financial interest in an audit client, even if it is only 4% of the bonds outstanding, creates a self-interest threat that impairs independence. Therefore, the CPA firm does not have the independence to audit this client. None of the other options provided in the question would alleviate this threat to independence.

A "Covered Member" of a CPA Firm Owns 4% of the Bonds