If a partner’s brother-in-law is a board member of an audit client, does this impair the firm's independence?

Independence is a fundamental principle for CPAs, especially when performing audits. In this scenario, having a partner's brother-in-law as a board member of an audit client does not automatically impair the firm's independence.

The key factors to consider include the nature of the relationship and whether it creates a direct financial interest or significant influence over the audit process. Under the AICPA's Code of Professional Conduct and other relevant regulations, relationships that do not create a direct financial interest or do not compromise the objectivity of the audit process typically do not impair independence.

Since the relationship involves a familial connection that is not direct, it generally does not affect the CPA's ability to remain objective and impartial in the audit. By acknowledging this, the selected answer correctly asserts that the firm’s independence is not impaired by the partner’s brother-in-law serving on the board of the audit client.

In contrast, scenarios that could impair independence would involve direct financial relationships, significant influence over the audit outcome, or if the partner had a direct role in the audit engagement while also having a close familial connection with a board member.