In a case where a CPA's sister is president of a company that is a client of another office of the CPA firm, what is the impact on independence?

The correct response highlights that the firm remains independent of the sister's company due to the nature of the relationship and how the CPA is associated with the client. In this scenario, the CPA's sister being the president of the company does not automatically impair the independence of the CPA or the firm as long as the CPA is not directly involved in the audit or the accounting services provided to the company.

Professional standards regarding independence primarily focus on direct relationships that can create conflicts of interest or the appearance of bias. As the CPA is not personally representing or making decisions for the client's company, and since the client is being served by another office within the firm that is separate from the CPA's specific duties, the independence is preserved. Furthermore, the firm’s policies and the professional conduct rules ensure that safeguards are in place to mitigate any potential threats to independence arising from familial relationships.

Considering the implications of other responses: the assertion that the firm is not independent due to family relations misinterprets how independence is assessed in this context. Similarly, suggesting that independence depends on the amount of business from the company overlooks the core issue of the CPA's direct involvement. Finally, the statement about independence being affected only if the partner works on the engagement does not fully address the nuances of independence