American Institute of Certified Public Accountants (AICPA) Practice Exam

Does independence remain intact if a former partner does not hold an accounting role with the audit client?

1. Yes, independence is maintained in that case.

2. No, independence is always impaired.

3. It depends on the nature of previous relationships.

4. Yes, but only for a certain period after leaving the firm.

The correct answer is: Yes, independence is maintained in that case.

Independence in accounting refers to the ability of auditors to remain objective and impartial when conducting audits. The principle asserts that if a former partner does not hold an accounting role with the audit client, then independence can be maintained. This is because the lack of an active role in the accounting or financial operations of the client reduces the risk of conflicts of interest that could arise from personal relationships or financial ties. This perspective aligns with the framework of independence rules that aim to ensure auditors can perform their duties without bias or compromise. The key consideration is whether there are any ongoing relationships or financial interests that could influence the auditor's judgment. If a former partner has transitioned out of the accounting role, the likelihood of conflicts is significantly diminished, thereby allowing auditors to maintain their independence. Other options suggest varying degrees of impairment that do not fully account for the context of the specific situation regarding the role of the former partner. It’s essential to assess independence based on current relationships and positions held within the client firm rather than past associations.