Question

An auditor may not disclose any confidential client information unless the auditor determines that disclosure is in the public interest.

A covered member’s independence would be impaired if an immediate family member was employed by the client company in any position.

The answer is false, but why?

Answer 1

A covered member’s independence would not be impaired if an immediate family member was employed by the client company in any position.  The exceptions are that independence would not be considered to be impaired solely as a result of the following:

1) The client held a position other than an important position in one of the leaders ' immediate family.

2) In relation to his or her job, a consumer is supported or invests in a clientele by a person in the immediate family of one of the following involved individuals engaging in a retirement savings salary or similar plan (if this program is usually available to all workers in a similar position):

1. A partner or manager who provides ten or more hours of non-attest services to the client; or
2. Any partner in the office in which the lead attest engagement partner primarily practices in connection with the attest engagement.

Lets understand this with the help of an example:

If Mr A is working with a company XYZ Ltd as a covered member. As per case, if any relative of Mr A is employed in the client company of XYZ ltd, it will not impair the independence of the Mr A. Since both the companies are different entity and it will not hamper the independence of Mr A.