Final answer:
A CPA would be considered independent according to ethical standards in the instance where the CPA belongs to a country club client and membership requires an annual fee. Other options provided indicate a material financial interest or reliance that could impair the CPA's independence.
Step-by-step explanation:
According to the profession’s ethical standards, a CPA (Certified Public Accountant) would be considered independent in the instance where the CPA belongs to a country club client in which membership requires an annual fee (Option D). The key aspect of the independence requirement is that the CPA should not have a material financial interest or any other conflicts that could impair objectivity or neutrality. In the scenarios provided:
- Option A involves a material indirect financial interest, as a client is leasing part of an office building, so the CPA is not independent.
- Option B has the CPA with a material direct financial interest transferred to a blind trust. While a blind trust offers some separation, the CPA still originally had a direct financial interest, which may impact independence.
- Option C presents a situation where the client guarantees the mortgage on an office building that the CPA owns, creating a significant financial reliance and hence, the CPA is not independent.
- Option D, however, is the most benign as belonging to a country club and paying an annual fee is not considered a material financial interest that would affect independence.
The independence of a CPA is critical for the public trust in the accounting profession and the integrity of financial reporting.