The case of Sid Seizure’s independence
Ethics
Charles Selcer, CPA, MBA | December 2020/January 2021 Footnote
Editor's note: Updated November 30, 2020
Sid Seizure, CPA bought a life insurance policy in October 2020 issued by the Unequitable Life Insurance Company of America. The policy allows Sid to invest in a mix of mutual funds. Sid put 20% of his investment provided by this policy in the Very Contrarian Fund (VCF). The VCF is an audit client of his one-office firm and has been for many years.
Q. Does this investment impair his firm’s independence on its audit of the VCF?
A. Yes. Sid’s investment is considered a direct financial interest in the VCF and, although the 2020 audit hasn’t begun yet, his October investment is considered “during the period of professional engagement.” See ET 1.257.020 and ET 0.300.070.39 (Period of Professional Engagement) and ET 0.300.070.12 (Covered Member).
