ExpertEasy1 markMultiple Choice
CPA · Question 73 · Area III: SOC Engagements
An auditor is assessing 'Independence' for a SOC engagement. Which of the following would impair independence?
An auditor is assessing 'Independence' for a SOC engagement. Which of the following would impair independence?
Answer options:
A.
The auditor owns stock in the service organization.
B.
The auditor has audited the firm for 3 years.
C.
The auditor uses the service organization's software for their own business at standard commercial rates.
D.
The auditor is a CPA.
How to approach this question
Identify the financial conflict of interest.
Full Answer
A.The auditor owns stock in the service organization.✓ Correct
A
Independence is impaired if the auditor has a direct financial interest (like owning stock) in the client. This creates a conflict of interest where the auditor might be biased to issue a favorable report to protect their investment.
Common mistakes
Thinking using the product (at market rates) impairs independence.
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