Loans, Leases, and Business Relationships Flashcards
1
Q
Name the three safeguards necessary to ensure that joint participation with an attest client in a joint venture will not impair independence
A
- )Separate agreements govern participation of the firm and the client.
- )Neither assumes responsibilities for the other’s activities or results.
- )Neither has the authority to act as the other’s agent or representative.
2
Q
From which entities should a covered member generally not borrow?
A
An attest client, its officers and directors, or any 10% shareholder
3
Q
Name two types of loans a covered member may have without impairing independence
A
Any of these:
- )Auto loans collateralized by the vehicle
- )Loans fully collateralized by the cash surrender value of insurance policy
- )Passbook or similar collateralized loans
- )Credit card or overdraft amounts up to $10,000
4
Q
Which kind of real estate lease is most likely to lead to an independence problem?
A
Capital leases