Question

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances?

a. A professional employee, who does not work on the audit, has a spouse who is a marketing manager for an audit client.
b. The auditor is also an attorney who advises the client as its general counsel.
c. An employee of the auditor donates service as treasurer of a charitable organization that is a client.
d. The client owes the auditor fees for two consecutive annual audits.

Answer 1

An auditor would be considered independent if a professional employee, not involved in the audit, has a spouse working as a marketing manager for the client, as it does not impair the auditor's independence.

Step-by-step explanation:

According to the profession's ethical standards, an auditor would be considered independent in the instance where a professional employee, who does not work on the audit, has a spouse who is a marketing manager for an audit client. This scenario is not seen as impairing independence unless the spouse has a significant role with the client that could influence the financial statements. The other options provided: auditor also being an attorney who advises the client, employee donations as a treasurer of a client charity, and the client owing fees for past audits, would all threaten the auditor's independence due to potential conflicts of interest, self-review threat, and financial dependency respectively.