Question

In: Accounting

Which of the following is allowable for a CPA? Group of answer choices: a. Owning more...

Which of the following is allowable for a CPA?

Group of answer choices:

a. Owning more than 5% of the outstanding shares of client stock in a retirement account.

b. A credit card from a banking client with a balance below $10,000.

c. An uncollateralized loan from a client.

d. The audit engagement partner serves on the client's audit committee.

Expert Solution

Answer b : A credit card from a banking client with a balance below $10,000.

Explaination

As per AICPA Plain English Guide to Independence

If you are a covered member with respect to an attest client, you and your immediate family may not have a loan to or from

• the attest client.

• an officer or a director of the attest client.

• an individual holding 10 percent or more of the attest client’s outstanding equity securities (or other ownership interests).

Certain exceptions affect this rule. First, specific loans exist that covered members are permitted to have from lending institution attest clients, including

• car loans and leases collateralized by the vehicle.

• credit card and overdraft reserve account balances that are kept current and do not exceed $10,000 (by payment due date, including any grace period).

• passbook loans fully collateralized by cash deposits at the same financial institution.

• loans fully collateralized by an insurance policy.

ekkarill92 answered 2 years ago

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