Final answer:
An auditor's independence would not be considered impaired if they had an immaterial indirect financial interest in the audit client, but it would be impaired if they had a direct financial interest, an immediate family member who is a key employee, or a loan collateralized by the auditor's card from the audit client.
Step-by-step explanation:
An auditor's independence would not be considered impaired if the auditor had an immaterial indirect financial interest in the audit client. This means that the auditor has a minor or insignificant financial interest in the client's affairs, which would not compromise their objectivity or independence.
However, if the auditor had a direct financial interest in the audit client, it would impair their independence. This means that the auditor has a financial stake in the success of the client and may be biased in favor of the client's interests.
Similarly, if the auditor had an immediate family member who is a key employee of the audit client, their independence would be considered impaired. This is because the auditor may have personal or financial ties that could affect their judgment and objectivity.
Lastly, if the auditor had a loan from the audit client that is collateralized by the auditor's card, it would impair their independence. This financial arrangement creates a conflict of interest and could compromise the auditor's objectivity.