American Institute of Certified Public Accountants (AICPA) Practice Exam

The correct answer identifies that independence is impaired if the arrangement between the former partner and the CPA firm is not fixed. This is grounded in the principle that a CPA firm must maintain a level of independence from its clients to ensure objectivity and integrity in its services. When a former partner has a financial arrangement that is not fixed, this can introduce potential conflicts of interest or perceptions of favoritism. For example, if the financial terms can fluctuate based on the work the CPA firm does for clients, this could suggest a possibility of compromising judgment or decisions made by the firm. Such arrangements may lead to concerns about the firm's ability to operate without bias or undue influence from its prior affiliations. The other options indicate scenarios where independence is not potentially compromised. However, the nature of financial relationships in the professional context is critical; therefore, it's essential to assess each specific arrangement carefully. A fixed arrangement would reduce the risk of impairment, as it would establish clear boundaries. Therefore, understanding the implications of various financial agreements is vital in maintaining the independence required for ethical CPA practice.