Overview and Unsolicited Financial Interests Flashcards

1
Q

Can a covered member own stock in an attestation client?

A

Cannot own direct (material and immaterial) or indirect interest (material only) you have an issue

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2
Q

Define Financial Interest?

A

Ownership or obligation to obtain interest in a company

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3
Q

Define direct financial interest?

A

An interest owned directly (even if it’s managed by others)

An interest under one’s control (even if managed by others)

An interest beneficially owned through an investment vehicle, estate, trust, or other intermediary

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4
Q

What is beneficial ownership?

A

Occurs when an individual or entity is not the record owner but has the right to some or all of the underlying benefits of ownership

Ex: Direct the voting or disposition of the interest or to receive its economic benefits

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5
Q

If you are NOT a covered member (and his or her immediate family), what is the maximum ownership percentage you can have in a client?

A

CANNOT OWN MORE THAN 5%.

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6
Q

What is an unsolicited financial interest?

A

If a covered member receives or leans they will receive an unsolicited interest in an attest client (gift or inheritance), independence will not be impaired IF they dispose of the interest as soon as practicable but WITHIN 30 DAYS.

If you don’t have the RIGHT to dispose, independence will not be impaired if the CM:

1) Disposes of the interest as soon as practicable but no later than 30 days after having both knowledge AND the RIGHT to dispose of the interest
2) Does not participate on the attest engagement after leaning and before disposing of it.

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