If an insurance company sues a CPA due to fraud that was not detectable by the CPA's normal procedures, what is the independence status of the CPA with respect to the client?

In the context of the scenario where an insurance company is suing a CPA for fraud that was not detectable through the CPA's normal procedures, the CPA's independence is maintained regardless of the lawsuit. Independence in the realm of a CPA's relationship with a client is typically assessed based on the current state of relationships and financial interests, rather than potential legal disputes that could arise.

Since the fraud was not detectable by the CPA's standard procedures, this indicates that the CPA fulfilled their professional responsibilities by adhering to due diligence and performing their work in accordance with the established standards and practices. Consequently, the existence of a lawsuit itself does not automatically impair the independence of the CPA unless there are specific financial interests or relationships that may have compromised it, which is not indicated in this scenario.

Maintaining independence is crucial for CPAs, as it affects their ability to provide unbiased opinions and accurate financial reporting. Therefore, even with a pending lawsuit alleging fraud, if the CPA acted within the normative guidelines of their professional duties and did not have conflicting interests, they are considered independent of the client.