American Institute of Certified Public Accountants (AICPA) Practice Exam

For CPA firms, what role does the independence standard serve?

1. It strengthens the firm’s marketability to potential clients.

2. It serves to maintain the integrity and objectivity of the auditing process.

3. It acts solely as a regulatory guideline without enforcement.

4. It aims to diminish the total number of accounting professionals.

The correct answer is: It serves to maintain the integrity and objectivity of the auditing process.

The independence standard is crucial for CPA firms as it is designed to uphold the integrity and objectivity of the auditing process. When auditors are independent, they can provide an unbiased assessment of a client’s financial statements, which is vital for maintaining stakeholders' trust in the financial reporting process. This independence helps to ensure that audit opinions are based solely on fair representations of the client’s financial position, free from any influence or conflicts of interests that could compromise the auditor’s judgment. The role of independence specifically supports the reliability of financial reports, making it a foundational aspect of the profession. Independence is not only about maintaining the professional standards set by the AICPA but also serves to protect the public interest by ensuring that audits are conducted rigorously and ethically. In contrast, other options present ideas that do not fully capture the primary purpose of the independence standard. While it might indirectly enhance marketability or serve as a guideline, those factors are secondary to its main objective of ensuring integrity in the auditing process. Additionally, the standard's intent is not to reduce the number of accounting professionals, but rather to promote ethical behavior among those in the profession.