ExpertHard1 markMultiple Choice
CPA · Question 01 · Area I: Ethics & General Principles
A CPA firm is auditing the financial statements of a nonissuer, TechInnovate Inc. The lead engagement partner's spouse has recently been promoted to a position at TechInnovate. Under the AICPA Code of Professional Conduct, which of the following positions held by the spouse would NOT automatically impair the firm's independence?
A CPA firm is auditing the financial statements of a nonissuer, TechInnovate Inc. The lead engagement partner's spouse has recently been promoted to a position at TechInnovate. Under the AICPA Code of Professional Conduct, which of the following positions held by the spouse would NOT automatically impair the firm's independence?
Answer options:
A.
The Director of Internal Audit.
B.
A warehouse manager with no access to financial data or accounting records.
C.
The Controller.
D.
A member of the Board of Directors.
How to approach this question
Identify the 'covered member' rules and the definition of a 'key position' under the AICPA Code. Immediate family members cannot hold key positions.
Full Answer
B.A warehouse manager with no access to financial data or accounting records.✓ Correct
A warehouse manager with no access to financial data or accounting records.
Under the AICPA Code of Professional Conduct (ET 1.270), independence is impaired if an immediate family member (spouse) holds a 'key position' with the attest client. A key position is one where the individual has primary responsibility for significant accounting functions, preparation of financial statements, or the ability to exercise influence over the contents of the financial statements. A warehouse manager without access to financial data does not meet the definition of a key position.
Common mistakes
Assuming any employment by a spouse impairs independence, regardless of the role.
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