American Institute of Certified Public Accountants (AICPA) Practice Exam

Do unpaid fees for professional services impair a CPA firm's independence?

1. Yes

2. No, if for services unrelated to audit

3. Only if they are significant

4. It varies by state regulations

The correct answer is: No, if for services unrelated to audit

Unpaid fees for professional services generally do not impair a CPA firm's independence if they are for services that are unrelated to an audit engagement. Independence is crucial for maintaining the integrity and objectivity of the CPA profession, particularly in attesting and auditing roles. When evaluating independence, the primary concern is whether there is a threat to an auditor's ability to perform their work impartially, especially regarding financial interests that could create a conflict. Fees that are unpaid and related to audit engagements raise serious independence issues because they may create a financial dependency on the client, which could influence the auditor's judgment. However, if the unpaid fees stem from services that are unrelated to the audit, the situation differs significantly. The AICPA recognizes that these unrelated services do not pose a direct threat to independence. Therefore, as long as the unpaid fees are not related to an audit, the CPA firm can maintain its independence and objectivity in performing audit services for that client. This principle aligns with the AICPA's guidelines which state that independence can be preserved if any fees due are for services outside the realm of auditing, taxation, or consulting directly tied to the audit.