In the case of a member who has a share in a country club where they are requested to perform an audit, how does their financial interest affect independence?

Financial interests must be carefully considered when it comes to maintaining independence in auditing. In the context of a CPA auditing an entity where they hold a share in a country club, the nature and materiality of that interest are crucial.

When talking about immaterial interests, these generally refer to a level of involvement or financial stake that would not influence a member's judgment or behavior regarding the audit. In this case, if the member's share in the country club is deemed immaterial, it would not impair their independence.

The notion is that the financial interest, being small enough not to affect objectivity, allows the CPA to perform their duties without bias or undue influence. CPAs are held to high ethical standards, requiring that their professional judgments remain free from any conflicts of interest. Therefore, as long as the financial stake in the country club is minor, their ability to act independently and objectively in the audit remains intact.

This understanding aligns with the AICPA Code of Professional Conduct, which outlines that independence may be compromised by material financial interests, but a minor, immaterial interest would not meet this threshold for independence impairment. Thus, the best interpretation in this scenario is that independence remains intact due to the immaterial nature of the interest in the country club.