According to Interpretation 101-1,independence is impaired if the auditor has any direct or material indirect financial interest in the client.An indirect financial interest includes
A)a material financial interest in a company associated with the client
B)stock ownership in the client
C)stock ownership in the client by a distant cousin
D)a loan to or from the client
E)an investment in a mutual fund that owns shares of stock in the company
F)both A and E
G)both B and C
H)both D and E

Question

Quizplus · Accepted Answer

A material financial interest in a company associated with the client and an investment in a mutual fund that owns shares of stock in the company are considered indirect financial interests that can impair independence according to Interpretation 101-1. Direct ownership (B) or loans (D) are direct interests, and stock ownership by a distant cousin (C) typically does not impair independence unless it is significant enough to influence the auditor's judgment.

According to Interpretation 101-1,independence Is Impaired If the Auditor Has