In the context of a joint business investment with a director of an audit client, maintaining independence is crucial for a CPA. The assertion that the investment must not be material to the member is particularly relevant because the CPA's independence can be compromised if their investment in the joint venture is significant enough to influence their judgment.
When the investment is not material to the CPA, it mitigates the risk of a conflict of interest, ensuring that the CPA can remain objective and impartial during the audit process. Materiality is a key concept in accounting because it helps determine whether a stakeholder's decisions could be affected by the information at hand. If the investment were to be material, it could lead to questions about the CPA’s ability to remain independent from the audit client, potentially impairing credibility and objectivity.
Other considerations revolve around the nature of relationships and interests in auditing standards, which generally uphold that both financial interests and business relationships must be scrutinized to uphold the integrity of the profession. Hence, the focus is on the CPA's material interest and preserving independence, rather than the materiality from either party’s perspective. Therefore, the correct assertion hinges on the member's independence being intact, highlighting the significance of materiality in this professional context.