In Which of the Following Circumstances Would a Covered Member

question 22

Multiple Choice

In which of the following circumstances would a covered member be considered independent when performing the audit of the financial statements of a new client for the year ended December 31,20X3?

• A)The covered member resigned on January 17,20X3 from the board of directors of the client,prior to accepting the new audit engagement.
• B)The covered member continues to hold an immaterial indirect financial interest in the client.
• C)The covered member continues to serve as a trustee for the client's pension plan and has the authority to make investment decisions.
• D)The covered member's spouse owns an immaterial amount of shares of common stock in the client.

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Definitions:

Superiors

Individuals in a higher position or rank within an organization, having authority over others in lower positions.

Organic Organizations

Flexible and adaptive organizational structures that are characterized by decentralized decision-making, wide spans of control, and less formal hierarchy.

Network Structure

An organizational layout where groups or individuals work independently but remain connected through a web of relationships.

Control

The power to influence or direct people's behavior or the course of events.