In the scenario where a partner's brother is on the board of directors of a client, how is the firm's independence affected?

When considering the implications of a partner's immediate family member, such as a brother, being on the board of directors of a client, the independence of the audit firm is indeed impaired. This is due to the close familial relationship which creates a potential conflict of interest. CPA independence is a fundamental principle that ensures that the firm’s judgment is free from any influence that could arise from personal relationships.

In this scenario, the partner's brother being in a position of influence over the client's financial decisions could lead to perceptions of bias or favoritism, thereby undermining the objectivity required for an auditor. Independence is not only about the absence of direct financial interests but also considers relationships that could give rise to potential conflicts.

The correct answer highlights the importance of maintaining a clear boundary between audit practices and personal relationships to uphold the integrity of the audit process. By recognizing that the partner’s brother has a role in the client’s governance, it is clear that this situation introduces risks to the impartiality of the audit team, thus impairing the firm's independence.