A "Covered Member" of a CPA Firm Owns 4% of the Bonds

question 30

Multiple Choice

A "covered member" of a CPA firm owns 4% of the bonds outstanding in an audit client.In accordance with the Independence Rule,does this CPA firm have the independence to audit this client?

• A) Yes, as long as the CPA's immediately family does not have any additional financial interests in this client
• B) Yes, as long as the bonds are not convertible into common stock
• C) No, unless the CPA agrees to not directly participate in the audit
• D) No, because of the self-interest threat

---

Definitions:

Sequential Game

A game theory model where players make decisions one after another, with later players having knowledge of the actions taken by those who preceded them.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, given the strategies of other players, and no player has anything to gain by changing only their own strategy unilaterally.

Payoff Matrix

A table that shows the potential outcomes of various strategies in a decision-making scenario, often used in game theory.

Sequential Game

A game in game theory where players make decisions or moves one after another, with later players having some knowledge of previous actions.