What determines if a CPA’s engagement may impair their independence?

The determination of whether a CPA’s engagement may impair their independence is closely linked to the materiality of financial interests held in the client. Independence is a fundamental ethical principle in the accounting profession, aimed at assuring that CPAs can perform audits or provide attestation services without conflicts of interest. When a CPA holds significant financial interests in a client, it raises a concern about their ability to remain objective. The larger the materiality of the financial interest, the greater the risk that personal bias may influence the CPA’s judgment or decisions, thereby impairing their independence.

While the type of services provided to the client can also impact independence considerations, it is primarily the financial interests that have a direct bearing on objectivity. Consent from the involved parties might seem relevant, but it cannot override the ethical obligations regarding independence that are dictated by financial interactions. Furthermore, a CPA's tenure at a firm does not inherently determine independence; rather, it is the financial connections and potential conflicts that are the critical factors. Thus, focusing on the materiality of financial interests as a determinant directs attention to the core of ethical independence in accounting practice.