A CPA's Financial Interests in Nonclients May Have an Effect

question 129

Multiple Choice

A CPA's financial interests in nonclients may have an effect on independence if the nonclients are investors in or investees of the client. Which situation would not impair a CPA's independence?

• A) The client has an immaterial investment in a nonclient investee in which the CPA has an immaterial investment.
• B) The CPA has a material indirect financial interest in a nonclient in which the client has a material investment.
• C) The client investor has a nonmaterial investment in the nonclient investee in which the CPA has a material investment.
• D) The CPA has a joint closely held investment with the client in a nonclient that is material to the client as well as the CPA.

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Definitions:

Milligrams

A reiterated definition: A metric unit of weight that equals to 0.001 grams, frequently used in pharmaceutical measurements.

Milligram

A unit of mass equal to one thousandth of a gram, often used in medicine to specify drug dosages.

Grain

A unit of measure traditionally used in pharmacology and jewelry, equal to approximately 0.065 grams.