CPA · Question 01 · Area I: Ethics & General Principles
A CPA firm is performing an audit of a nonissuer, TechInnovate Inc. The engagement partner's spouse recently inherited 50 shares of stock in TechInnovate Inc. The value of the stock is $2,500, which is considered immaterial to the spouse's net worth and the partner's net worth. The spouse plans to sell the stock within 30 days. According to the AICPA Code of Professional Conduct, which of the following statements is correct regarding the firm's independence?
Answer options:
Independence is not impaired because the financial interest is immaterial to the covered member's net worth.
Independence is impaired because the financial interest is direct, regardless of materiality.
Independence is not impaired provided the stock is sold within 30 days of receipt.
Independence is impaired only if the spouse holds more than 5% of the client's outstanding shares.
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