Auditing and Attestation - Certified Public Accountant (CPA) Practice Exam 2025 - Free CPA Practice Questions and Study Guide

Choosing the employment relationship where independence is not impaired revolves around understanding the concepts of family relationships and direct influence on audits. In this context, having a spouse working in a position that does not directly affect the financial reporting or audit process, such as a customer service role, is generally viewed as not impairing independence.

The essential concern in maintaining independence is the potential for conflicts of interest or undue influence over the audit team. A customer service position typically does not involve decision-making related to financial reporting or influence over the engagement itself. Therefore, the spouse's role does not create a direct conflict that could compromise the objectivity and impartiality necessary for the audit.

In contrast, the other scenarios involve direct roles that could influence financial statements or management decisions. For instance, having a former controller on the engagement team can raise concerns about objectivity due to their previous intimate knowledge of the company’s operations and finances. Similarly, a lead partner serving on a board of directors risks conflicts of interest and lacks the necessary distance to maintain an objective stance in the audit. Lastly, the former manager now acting as CFO introduces a direct relationship with executive management that could also impair the firm's independence due to potential biases in the audit process.

By focusing on the nature and impact of the