Case 1
a) Arguments indicating that the firm’s independence has not been impaired:
• Moore and Scott for the time being are just friends, not legally married.
• There is not a common financial interest since they are not legally married.
• By Scott investing in shares, Moore would view this as indirect since Scott would receive any benefits from the investment and are in her name.
• Since Moore’s interest is not direct, his independence should not be impaired since Scott’s shares that she invested in are not material to their overall net worth.
• Should a third party have access to all the facts, this does not indicate an intolerable risk to the firm’s independence has been established. (Goria and Yaffe, 2002).
b) Arguments indicating that the firm’s independence has been impaired:
• The appearance of independence to a third party is compromised. Most parties would view a couple living together the same as being married. This would cause Moore’s independence to be impaired (AICPA, 2011).
• In reading The AICPA’s Code of Professional Conduct, in order for Moore to evaluate his position, he should consider his capability to perform independently and if a third party that knew all the facts would consider Moore’s and Scott’s relationship to be the same as a married couple. A third party could assume that Moore would be involved and concerned over Scott’s finances and could end of being a conflict since Scott has investment is linked to audit clients (AICPA, 2011).

c) Opinion From the standpoint of the argument that the firm’s independence has not been impaired, and that the shares are really not material to their overall financial worth would be most persuasive in the eyes of a third party, seconded by the fact that they are not married. Since, for the time being they are not legally married and the shares that were purchased are not material or relevant to her financial worth, it could be argued this would not constitute impairment. This would be a judgement call on behalf on interested parties. From the standpoint of the argument that the firm’s independence has been impaired, the fact that since a third party could consider Moore and Scott’s relationship the same as being married, seconded by the fact that due to the nature of the relationship. Moore could be concerned with Scott’s finances. In an effort to protect and accumulate finances, it could be considered a conflict and impairment of the firm’s independence. In my opinion, this case could definitely be viewed as an impairment to the firm’s independence and possibly a conflict of interest. If the firm has not already done so, it should adopt conflict of interest polices and review with every partner or employee. Additionally, Moore should not invest any further or both should consider leaving apart.
Case 2
a) Arguments indicating that the firm’s independence has not been impaired:
• Mary’s independence could be impaired but not the firm’s independence, since the firm has not made her a covered member according to the interpretation of Sec. A, 101-1 (Goria and Yaffe, 2002).
• In Article IV in the Code of Professional Conduct, the AICPA (1988) states “a member in public practice should be independent in fact and appearance when providing auditing and other attestation services” (p. 36).
• In this case, independence in appearance hangs on the fact that if an objective party who knew all the facts could the conclusion that there are any threats, especially since he has only invested in “one” stock. This in itself would not affect her independence (AICPA, 2011).
b) Arguments indicating that the firm’s independence has been impaired:
• When evaluating the interpretation of 101-1, it prohibits financial interests that are direct in nature. Her husband’s financial interests are directly connected to Mary as the CPA, since they are married. This would impair her independence, as well as that of the firm’s if she is part of the audit engagement (AICPA, 1988).
• Most states recognize any property between a married couple as community property, so Mary could ultimately recognize a gain or a loss in the client’s stock. When it comes to “direct” financial interests, materiality is not considered an issue (Whittington and Pany, 2014).
c) Opinion From the standpoint of the argument that the firm’s independence has not been impaired, since it appears that she is not a covered member, then it would affect only her independence. It would be hard to conclude that investing in “one” stock would adversely impair the firm’s independence.
From the standpoint of the argument that the firm’s independence has been impaired, if one goes by the interpretation 101-1, then independence has been impaired and Mary could stand to benefit directly from any investments in stock.
In my opinion, interested parties that know all pertinent facts would draw the conclusion that there is a high (unwanted) risk to Mary’s independence.

References
AICPA. (1988). Code of professional conduct. Retrieved from http://www.aicpa.org/Research/Standards/CodeofConduct/DownloadableDocuments/2010June1CodeofProfessionalConduct.pdf.
AICPA. (2011). Code of professional conduct and bylaws. Retrieved from http://www.aicpa.org/Research/Standards/CodeofConduct/DownloadableDocuments/2011June1CodeOfProfessionalConduct.pdf.
Goria, E., & Yaffe, E. (2002). Test your knowledge of professional ethics. Retrieved from http://www.journalofaccountancy.com/issues/2002/oct/testyourknowledgeofprofessionalethics.html.
Whittington, R., & Pany, K. (2014). Principles of Auditing & Other Assurance Services (19th Ed.). New York, NY: McGraw-Hill, Irwin.