IFAC vs AICPA Independence

Question 1

Gifts Received test

Answer 1

IFAC - Trivial and Inconsequential

AICPA - Reasonable in the circumstances

Question 2

Tax return preparation

Answer 2

Both - Transmitting and preparing Tax returns is not a threat as long as Management takes responsibility for the returns and any Judgements made

Question 3

Providing Bookkeeping / payroll services

Answer 3

IFAC - Only in an emergency situation

AICPA (General Requirements for Non Attest Services) - Permitted as long as management makes all “Final” Decisions.

Question 4

Immaterial Indirect Financial Interest held by an intermediary (Mutual Fund)

Answer 4

IFAC - Member unable to influence investment decisions

AICPA - Member owns less than 5% in a Diversified mutual fund

Question 5

Unpaid feeds

Answer 5

Both - Impairs independence if overdue for more than 1 year

Question 6

Audit firm acts in a Advocacy Role. ex. Arbitrator

Answer 6

IFAC - Allowed if 1) Not Material and 2) Appropriate safeguards are applied

AICPA - Impairs independence