When does the SEC consider independence impaired?
You are not independent in fact
A reasonable investor would conclude that you would not be capable of acting without bias
SEC may look to four basic principles in evaluating independence
Does the relationship create a mutual or conflicting interest?
Does it place the firm in a position where it will audit its own work
Does the firm effectively act as management/employee of the client
Does it place the firm in a position where it acts as an advocate for the client
Difference between AICPA and SEC rules concerning jointly-held investments
: impaired if investment is material to covered member's net worth
: materiality doesn't matter