American Institute of Certified Public Accountants (AICPA) Practice Exam

Can independence be preserved if a CPA serves on an advisory committee related to a client?

1. Yes, if it is a neutral advisory role

2. No, it compromises independence

3. Only if the committee's focus is unrelated

4. It varies depending on client type

The correct answer is: Yes, if it is a neutral advisory role

Independence can be preserved if a CPA serves in a neutral advisory role on an advisory committee related to a client. When a CPA is involved in an advisory capacity that does not give them decision-making authority or a management role, the expectation is that they can maintain objectivity. This neutrality is crucial; it ensures that the CPA's ability to provide unbiased and impartial professional judgment is not impaired. In situations where the CPA's contributions are strictly advisory and they do not have any vested interests or the ability to influence the outcomes significantly, independence is more likely to be preserved. The relationship with the client remains at an arm's length, allowing the CPA to continue to uphold ethical standards in their work and maintain credibility in the profession. Other scenarios, such as being in a decision-making capacity or having a financial interest in the client’s outcomes, could threaten independence. Thus, the context and nature of the CPA’s involvement are critical considerations in determining whether independence can be maintained.