Scenario: The Auditor's Family Ties

Reading Passage

Jim is a partner at a CPA firm. He is lead auditor for Sparkle Corp. Jim's wife, Sarah, works as a marketing manager at Sparkle Corp. Jim's father owns 5% of Sparkle Corp's outstanding stock.

Question 1 of 5

Does Sarah's employment impair Jim's independence?

Yes, because she is his wife

No, because she is not in a financial reporting oversight role

Yes, because she gets a salary

Only if she owns stock

Question 2 of 5

Does Jim's father's stock ownership impair independence?

No, because he is not a "covered member"

Yes, if the 5% is material to the father's wealth

Yes, always

No, only if Jim also owns stock

Question 3 of 5

Which of the following is a "Covered Member"?

An individual on the attest engagement team

A partner in the same office

The CPA firm itself

All of the above

Question 4 of 5

Can an auditor accept a $50 gift card from a client?

Yes

No, if it is more than "token" value

Only for Christmas

Yes, if it is under $500

Question 5 of 5

When is independence required?

During the period of the professional engagement

During the period covered by the financial statements

Both A and B

Neither

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