Crazy auditing independence questions–Need help

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  • #1330980
    xiaofeifei
    Participant

    Company A is closely held and it is the general partner of Company B and Company C. Company A’s investment to Company B and C is immaterial. The auditor has an immaterial investment in company B and have no investment in company A and C. If the auditor will do auditing for Company A, B and C, which company will impair his independence?

    I am totally getting lost for this question, can anyone help to figure out?

    Thanks

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  • #1330989
    kayfcpa16
    Participant

    A has a Direct interest in B & C. (being a general partner)
    The auditor has a direct interest in B. (Their Investment in the company)
    The auditor also have a indirect interest in A. (Since A – B have a direct interest)..

    Independence is impaired by:
    Direct Interest – Material & Immaterial.
    Indirect Interest – Material.

    Based on the facts Company B will impair independence.

    FAR - 2/16 - 78
    BEC - 2/16 - 78
    AUD - 8/16
    REG - 8/16

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