CPA · Question 02 · Area I: Ethics & General Principles
An auditor is performing an audit of an issuer, Global Corp, in accordance with PCAOB standards. The auditor discovers that the client's Chief Financial Officer (CFO) was the lead engagement partner on the audit five years ago. The CFO left the CPA firm four years ago. Which of the following correctly describes the independence implications under SEC and PCAOB rules?
Answer options:
Independence is impaired because a former partner in a financial reporting oversight role permanently impairs independence.
Independence is impaired because the cooling-off period is five years for lead partners.
Independence is not impaired because the one-year cooling-off period has been satisfied.
Independence is impaired unless the audit committee pre-approves the employment relationship.
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