Julie Webb,CPA,takes out an automobile loan with First National Bank of Wellville (FNBW)while attending the University of Wellville.Julie graduates one year later and is hired as an auditor by Best and Driftwood,LLP.Her first assigned audit engagement is with First National Bank of Wellville,a client of Best and Driftwood.As a new audit assistant,Julie continues to pay her automobile loan payments each month.Which of the following best describes Julie's independence status?
A)Impaired because Julie has a direct financial interest in FNBW.
B)Impaired because Julie has a material indirect financial interest in FNBW.
C)Not impaired because Julie has an immaterial indirect financial interest in FNBW.
D)Not impaired because Julie is permitted to take normal loans from FNBW.

Question

Quizplus · Accepted Answer

Julie's independence is not impaired because auditors are allowed to have loans, such as an automobile loan, from a financial institution client as long as the loans are made under normal lending procedures, terms, and requirements.

Julie Webb,CPA,takes Out an Automobile Loan with First National Bank