5. A CPA is not permitted to disclose confidential client information without th

Question

5. A CPA is not permitted to disclose confidential client information without the consent of the client to I. Another CPA who has purchased the CPA's auditing practice. II. A successor CPA who took over the CPA's audit of the client II. A state CPA society's quality control review board for the purpose of a peer review program a. I and III. b. II and III c. I and II 6. A CPA purchased stock in a mutual fund that, in turn, purchased stock in the CPA's audit client. The CPA placed the mutual fund investment in a trust as an educational fund for the CPA's dependent child. The trust securities were not material to the CPA but were material to the child's personal net worth. Would the independence of the CPA be considered impaired with respect to the client? a. Yes, because the stock would be considered a direct financial interest and, consequently, materiality b. Yes, because the stock would be considered an indirect financial interest that is material to the CPA's c. No, because the CPA have placed the mutual fund investment in a trust for the CPA's dependernt d. No, because the CPA's mutual fund investment is a joint-investee-client relationship that is not is not an issue. child. child material to the CPA's personal net worth.

Explanation / Answer

5. Option c is correct. CPA doesn't need the consent of client to disclose the confidential information to quality control review board for the purpose of peer review program. In the other two cases, he can disclose the same, with the consent of client.

6. Option A is correct. Yes because the stock would be considered a direct financial interest and consequently,materiality is not an issue. Its so, as he will get to know all the financial information and can increase or decrease his investment accordingly.

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