Choice "B" is correct. Although the bonds are not material in relation to the member's total wealth, independence is still impaired because the ownership of the bonds represents a direct financial interest in the client and a violation of AICPA Rule 101 – Independence. Choice "c" is incorrect. Independence is not violated because the member is the children's guardian, but is not a trustee of the estate held in trust for the children.Choice "a" is incorrect. Independence is not impaired by membership in a client credit union. Choice "d" is incorrect. According to an AICPA ethics ruling, as long as the membership in the golf club is essentially a social matter, the covered member's association with the golf club would not impair independence because the debt ownership is not considered to be a direct financial interest.
