A CPA or firm permit holder’s independence may be impaired by a close relative’s

A CPA or firm permit holder’s independence may be impaired by a close relative’s association with a client. Close relatives are defined as spouses and dependent persons, whether or not related, and defined as dependent and non-dependent children, grandchildren, stepchildren, brothers, sisters, parents, grandparents, parents-in-law, and their respective spouses. (a) CPA and firm permit holders must consider whether the strength of personal and business relationships between the CPA or firm permit holder and the close relative would lead a reasonable person who is aware of all the facts to conclude that the situation poses an unacceptable threat to the certificate or registration holder's objectivity and appearance of independence. In reaching this conclusion, the CPA or firm permit holder should consider the specific association with the client. (b) A CPA or firm permit holder’s independence will be presumed to be impaired with respect to a client if: (1) during the period of the professional engagement or at the time of expressing an opinion, the CPA or firm permit holder participating in the engagement has knowledge of a close relative who has a material financial interest in the client; (2) during the period covered by the financial statements, during the period of the professional engagement, or at the time of expressing an opinion: a. the CPA or firm permit holder participating in the engagement has a close relative who could exercise significant influence over the operative, financial, or accounting policies of the client or is otherwise employed in a position in which the close relative's activities are normally an element of or subject to significant internal accounting controls; b. a proprietor, shareholder, or individual in a managerial position in a CPA or firm permit holder’s office has a close relative who could exercise significant influence over the client's operating, financial, or accounting policies, if that proprietor, shareholder or individual participates in a significant portion of the engagement.