50 MODULE 21 PROFESSIONAL RESPONSIBIliTIES

the general assets of the insurance company.

Rule 101,102 Ethics Rulings
18. A university faculty member cannot be
Independence and Integrity Ethics Rulings independent
2. A member may join a trade association that is a to a student senate fund because the student senate is
client, without impairing independence, but may not a part of the university which is the member's em-
serve in a capacity of management. ployer.
3. Extensive accounting and consulting services, in-
cluding interpretation of statements, forecasts, etc.,
do not impair independence ..
4. Independence is impaired if the member cosigns
checks or purchase orders or exercises general su-
pervision over budgetary controls.
5. The independence Of an elected legislator (a
CPA)
in a local government is impaired with respect to
that governmental unit. .
6. Mere designation as executor or trustee, without
ac-
tual services in either capacity, does not impair in-
dependence, but actual service does.
7. If a member is a trustee of a
foundation,indepen-
dence is impaired.
8. Independence of a member serving as director or
of- .
ficer of a local United Way or similar organization
is not impaired with respect to a charity receiving
funds from that organization unless the organization
exercises managerial control over that charity.
9. Independence is impaired if a member serves on
the
board of a nonprofit social club if the board has ul-
timate responsibility for the affairs of the club.
10. The acquisition of equity or debt securities
as a con-
. dition for membership in a country club does not
normally impair independence; serving on the club's
governing board or taking part in its management
does impair independence.
11. Independence is impaired if a member serves on
a
. committee administering a client's deferred com-
pensation program.
12. Membership on governmental advisory
committees
does not impair independence with respect to that
governmental unit. .
13. A member serving as director of
an.enterprise would
not be independent with respect to the enterprise's
profit sharing and retirement trust.
14. A member's independence is impaired
when owning
bonds in a municipal authority.
15. A member's ownership of an apartment
in a co-op
apartment building would impair the member's and
the firm's independence.
16. A member serving with a client bank in a
cofiduci-
ary capacity, with respect to a trust, does not impair
independence with' respect to the bank or trust de-
partment (if the estate's or trust's assets were not
material).
17. Independence is not impaired when a
member's re-
tirement plan is invested and managed by an insur-
ance company in a separate account, not a part of
19. Independence is impaired when prior year fees for
professional services, whether billed or unbilled,
remain unpaid for more than one year prior to the
date of the report.
20. If a member audits an employee benefit plan, inde-
pendence is impaired with respect to employer if a
partner or professional employee of the firm had
significant influence over such employer, was in a
key position with the employer, or was associated
with the employer as a promoter, underwriter, or
voting trustee.
21. Independence with respect to a fund-raising founda-
tion is impaired if a member serves on the board of
directors of the entity for whose benefit the founda-
tion exists (unless position is purely honorary).
22. Member who is not in public practice may use CPA
designation in connection with financial statements
and correspondence of member's employer. May
also use CP A designation on business cards if along
with employment title. Member may not imply in-
dependence from employer. Member cannot state
that transmittal is in conformity with GAAP.
23. If a client financial institution merely services
a mal (see Interpretation 101-1), and (4) the condi-
member's loan, independence is not impaired.
24. A member with a material limited partnership inter-
est is not independent of other limited partnerships
that have the same general partner.
25. Maintaining state or federally insured deposits (e.g.,
checking accounts, savings accounts, certificates of
deposit) in a financial institution does not impair in-
dependence; uninsured deposits do not impair inde-
pendence if the uninsured amounts are immaterial.
26. CPA Firm A is not independent of an entity
audited
by Firm B. CPA Firm B may only use Firm A per-
sonnel in a 'manner similar to internal auditors with-
out impairing Firm B' s independence.
27. A member (and the member's firm) are not inde-
pendent if the member serves on the advisory board
of a client unless the advisory board (1) is truly ad-
visory, (2) has no authority to make or appear to
make management decisions, and (3) membership is
distinct with minimal, if any, common membership
with management and the board of directors.
28. A member must be independent to issue an audit
opinion or a review report, but need not be inde-
pendent to issue a compilation report (such lack of
independence is disclosed).
29. Membership in a credit union does not impair
audit
independence if (1) the member qualifies as a credit
union member on grounds other than by providing
professional services, (2) the member does not exert
significant influence over the credit union, (3) the
member's loans (if any) from credit union are nor.-
tions of ruling 70 have been met.
30. A member's investment in a limited partnership
im-
pairs independence with respect to the limited part-
nership; when the investment is material, indepen-
dence is impaired with respect to both the general
partner of the limited partnership and any subsidi-
aries of the limited partnership.