What is Direct and indirect financial interests?
In short
Any direct financial interest in an attest client, such as owning its shares, held by a covered member impairs independence, however small. An indirect interest, such as through a mutual fund, impairs independence only if material.
Key takeaways
- Interests held through an investment vehicle the member controls are treated as direct.
- Interests of a covered member's immediate family are treated as the member's own.
- Some close relatives' material interests can also impair independence.
Where it's tested
AUD: Professional Ethics & Independence — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which situation most clearly impairs a covered member's independence with respect to an audit client?