COCOMOCPA

📘 CPA AUD Simulation #1 - Is Independence Really Impaired?

💡 TIP: A spouse's investment can be considered a direct financial interest that impairs independence!

Scenario:
Bright & Co. is preparing to take on a new audit client. Before the engagement begins, you must evaluate whether certain team member relationships impair auditor independence. Review each case below and determine whether independence is impaired.

Situation	Independence Impaired? (Yes / No)
A. The engagement partner's spouse owns $1,000 of GreenSky stock in a retirement account.	Yes
B. A staff auditor previously worked as GreenSky’s internal auditor but left the company 6 months ago.	No
C. A partner in a different office provides tax services to GreenSky but is not involved in the audit.	No
D. The audit manager received a job offer from GreenSky during the engagement and has not responded yet.	Yes

✅ Explanation Summary

• A: A spouse is an immediate family member. Even through a retirement account, direct financial interest impairs independence.
• B: Former employees can join audit engagements after sufficient time has passed. Six months is generally acceptable.
• C: A partner not involved in the engagement and from a different office is not a covered member. Independence is not impaired.
• D: Receiving a job offer from the client without taking immediate action (e.g., disclosure or withdrawal) impairs independence.

👉 Try the next simulation question too!
📚 [CPA AUD Simulation #2 - Client Acceptance]