Independence

Question 1

Debt/ Equity securities issued by client

Answer 1

Impairs

Question 2

Debt/Equity securities for social club membership dues

Answer 2

Not Impaired

Question 3

Services Provided to Audit Client

Answer 3

Not impaired UNLESS related to attest subject matter

Question 4

SEC Auditors Services

Answer 4

prohibits book-keeping

IF not subject to an audit book-keeping is permitted by the SEC

Question 5

AICPA Auditors Service

Answer 5

non-issuers allowed to do book-keeping services

Question 6

Litigation

Answer 6

Impairs if:
1 - auditor sues client for fraud
2 - Client expresses suit against auditor

** must be related to the auditor

Question 7

Unpaid Bills from previous audits

Answer 7

impaired

Question 8

Dinners from client

Answer 8

not impaired

Question 9

Direct Financial Interest

Answer 9

impairs

Question 10

Advisory

Answer 10

not impaired

Question 11

Auditor on the board of directors

Answer 11

not impaired if:
1 - honorary position
2 - gives no advice to management

Question 12

APS

Answer 12

excludes indirect personnel

Question 13

Spouse receiving commission based on referral

Answer 13

not impaired

Question 14

Conflict of interest with disclosure

Answer 14

not impaired

Question 15

Objectivity (independence)

Integrity

Answer 15

Objectivity - issuers only

Integrity - both issuers and non-issuers

Question 16

Servicing a loan

Answer 16

not impaired

servicing = clerical function

Question 17

Control & IT is impaired when

Answer 17

auditor implements and monitors

DESIGN is permitted

Question 18

Direct Financial Interest

Indirect Financial Interest

Answer 18

impairs independence

if MATERIAL impairs independence

IFAC always impairs independence