Which of the following family relationships is most likely to impair a CPA's independence with respect to a particular audit client on which the CPA works as a “covered member”? Select one: The CPA's spouse participates in a savings plan sponsored by the client. A cousin has an immaterial investment in the client of which the CPA is aware. The CPA's father is president of the audit client. A close relative has a material investment in that client of which the CPA is not aware.
Which of the following family relationships is most likely to impair a CPA's independence with respect to a particular audit client on which the CPA works as a “covered member”?
Select one:
The CPA's spouse participates in a savings plan sponsored by the client.
A cousin has an immaterial investment in the client of which the CPA is aware.
The CPA's father is president of the audit client.
A close relative has a material investment in that client of which the CPA is not aware.
ANSWER:-
3.The CPA's father is president of the audit client
Explanation:-
A "covered member" is a term used in auditing to refer to individuals who have the potential to influence the outcome of an audit, such as key members of the audit team and their close family members. The independence of these covered members is critical to maintaining the integrity and objectivity of the audit process.
Having a close family member who holds a significant position in the audit client company, such as the CPA's father being the president of the client, is most likely to impair the CPA's independence with respect to that particular audit client. This is because the CPA may have a personal interest in the success of the client, and could be influenced to overlook or downplay certain issues that could affect the client's financial reporting.
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