[Jchen]

If the covered member owns immaterial and indirect interest from the audit client, the independence is not impaired right?

Can someone please kindly advise.

Thanks in advance!!

[qarnism]

Material. Direct. X
Material. Indirect. X
Immaterial. Direct. X
Immaterial. Indirect Ok

e.g. You've 1 share with third party that working with your client.
So, this immaterial and indirect = doesn't impair independence.

[Anonymous]

Right. I think of it this way.

If I own stock in the audit client, I'm not independent. Doesn't matter if it's $10k or $100k.

If I have $10k in a mutual fund and the fund owns stock in many companies, including the client, that doesn't impair independence.

[Anonymous]

I had a way of remembering this, wish I could remember. The important part is:
All Direct Interests (Materiality is irrelevant)
All Material Interests (Direct/Indirect is irrelevant)

I think that's right. There's some great quizzes in the Journal of Accountancy:
https://www.journalofaccountancy.com/issues/2012/oct/20125461.html
https://www.journalofaccountancy.com/issues/2014/dec/applied-ethics-quiz.html
https://www.journalofaccountancy.com/issues/2010/oct/20103166.html
https://www.journalofaccountancy.com/issues/2010/jun/20102778.html

[Jchen]

Thanks Guys!

You are awesome!!

[Author]

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