American Institute of Certified Public Accountants (AICPA) Practice Exam

Does a partner leaving their firm to work for an attest client impair the firm's independence?

1. Yes

2. No

3. It depends on the nature of the consulting

4. Only if the client engages in high-risk activities

The correct answer is: No

The determination of whether a partner leaving their firm to work for an attest client impairs the firm's independence depends on the specific circumstances. In many cases, leaving a firm to work for an attest client does not automatically impair independence. The key factors that come into play are the timing of the departure and the relationship the firm had with the client before the partner left. If the partner was not significantly involved in the audits of that particular client prior to their departure, and the firm maintains appropriate safeguards, independence may still be considered intact. Additionally, relevant regulations and guidance from auditing standards and ethical codes may outline specific parameters that govern these situations. Thus, a blanket assumption that leaving the firm for an attest client impairs independence does not hold true in all instances; rather, it relies on nuanced considerations regarding the relationships and roles involved. The other options do imply scenarios or conditions that do not have a blanket applicability, and they might not cover the broader context of independence as comprehensively.