Which of the following statements is correct regarding auditor independence as stated by the AICPA in Rule 101?
A)A covered member's immediate family can have a direct financial interest in a client.
B)A covered member can have a joint investment with a client.
C)A covered member involved in the audit of a bank can have an auto loan at the bank.
D)A covered member can have a direct financial interest in a client as long as it is not material and is disclosed properly.

Question

Quizplus · Accepted Answer

According to AICPA Rule 101, a covered member cannot have any direct financial interest in a client, including their immediate family or joint investments. However, the rule does allow for certain exceptions, such as a covered member being able to have a consumer loan (such as an auto loan) at a client bank. Therefore, option C is the only statement that is correct. Option D is incorrect as any direct financial interest in a client is prohibited, regardless of its materiality, although disclosure may provide transparency.

Which of the Following Statements Is Correct Regarding Auditor Independence