What must occur to maintain independence when a CPA's relative holds a position with the audit client?

To maintain independence when a CPA's relative holds a position with the audit client, the most critical factor is that the relative cannot influence the client financially. This principle is rooted in the core ethical standards that govern professional conduct for CPAs, specifically the need to avoid situations where objectivity and impartiality could be compromised due to familial relationships.

If a relative is in a position that could potentially influence the financial decisions or policies of the audit client, this could lead to a conflict of interest or an appearance of a lack of independence. Therefore, it is essential that the relative's role does not extend into areas where they have authority or decision-making power that could impact the audit's findings.

Maintaining independence doesn't necessitate that the relative must resign from their position or that all relatives must cease involvement with the client, as long as there is no capacity for financial influence. Furthermore, the physical location of the relative's office does not inherently guarantee independence if they have the ability to affect the client's financial dealings. Thus, focusing on the ability of the relative to exert influence is the key to ensuring independence in the auditor-client relationship.