Question

Smith CPA is a partner of the CPA firm Beck CPA's. Beck audited the books of Hometown Bank. Smith's independence would be impaired under which of the following circumstances? Enter problem statement, appropriate input type, and other instructions here. O A. Smith's 4 year old daugher owns one share of stock in Hometown Bank OB. Smith and a Hometown Bank board member belong to the same church O C. Smith owns $100 in a mutual fund that invests in Hometown Bank OD. Smth has a savings account with Hometown Bank that is fully insured

Answer 1

Ans C is right

If A auditor have matual fund in which company in which he doing audit then his independent would be impaired. no person associated with an audit firm (including their dependents) should directly hold any instruments of a client or a client affiliate. ... no "audit chain of command" person could own shares of a mutual fund if the mutual fund holds securities of the audited entity.

So Smith own $100in a matual fund the investment in home loan bank would be impaired the independence of the Smith.