Answered: When is independence impaired under…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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When is independence impaired under PCAOB standards?

Expert Solution

Impairment of independence under PCAOB Standards

Independence would be considered to be impaired if a covered member accepts more than a token gift from a client, even with the knowledge of the member's firm.
Independence would be considered to be impaired if any partner or professional employee of the firm served as an elected legislator for a city at the same time his or her firm was engaged to perform the city's attest engagement, even though the city manager is an elected official rather than an appointee of the legislature.
If a covered member actually served as an executor or trustee of the estate of an individual who owns the majority of a client's stock, independence would be considered to be impaired.
If a covered member served as trustee of the foundation, independence would be considered to be impaired with respect to both the foundation and the estate.

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