Final answer:
Audit independence is most clearly lost when auditors have a financial interest in the audit client, provide tax services to the audit client, or have an immediate family member who works for the audit client.
Step-by-step explanation:
Audit independence is most clearly lost when auditors have a financial interest in the audit client, as this creates a conflict of interest that compromises objectivity and integrity. When auditors provide tax services to the audit client, it can also impair independence, as they may be inclined to overlook financial irregularities to maintain a good relationship and secure future tax business. Similarly, auditors having an immediate family member who works for the audit client can lead to bias and compromise the independence of the audit.
However, auditors serving as expert witnesses for the audit client may not necessarily result in a loss of independence, as long as they uphold their professional duty and maintain objectivity in their role as a witness.