Depository Accounts, Brokerage Accounts, and Insurance Policies

Question 1

Individual covered members may maintain such accounts if any of three conditions is met:

Answer 1

1) The balance in the depository account is fully insured, or
2) Any uninsured amounts were not material to the covered member’s worth, or
3) If uninsured accounts are considered material, they are reduced to an immaterial amount within 30 days of becoming material.

Question 2

A covered member’s brokerage account at an attest client broker-dealer would not impair independence only if both of the following apply:

Answer 2

1) The attest client’s services were rendered under the attest client’s normal terms, procedures, and requirements.
2) Any covered member’s assets subject to the risk of loss are immaterial to the covered member’s net worth.
In determining risk of loss, the question is not whether the assets’ market value might decline but whether the client might become insolvent or commit fraud. Protection by regulators and insurance are relevant factors in determining risk of loss.

Question 3

An insurance policy is not a financial interest unless it offers an _____

Answer 3

Investment option