Which of the following items impairs independence under U.S. ethics standards, but does not necessarily impair independence under the IFAC Code of Ethics for Professional Accountants?
a.The auditor also provides internal audit outsourcing services.
b.Contingent fee arrangements for audit engagements.
c.Employment at a client of an immediate family member of the engagement partner in a key accounting position.
d.An immaterial direct financial interest in an audit client.
Answer:A
Choice "A" is correct. Under the IFAC Code of Ethics, an auditor may provide internal audit services if appropriate safeguards are put in place to limit or eliminate any threats to independence. Internal audit outsourcing services may not be provided to audit clients under U.S. ethics standards.
Choice "d" is incorrect. Any direct financial interest impairs independence under both U.S. ethics standards and the IFAC Code of Ethics.
Choice "c" is incorrect. Employment at a client of an immediate family member of any audit team member in a key position impairs independence under both U.S. ethics standards and the IFAC Code of Ethics.
Choice "b" is incorrect. Contingent fee arrangements impair independence under both U.S. ethics standards and the IFAC Code of Ethics.