Choice "A" is correct. According to the Code of Professional Conduct, a CPA may only serve on the board of directors when the CPA does not audit the company and has no other business connections with the company. A CPA's independence is impaired by business relationships with its client, including service on the client's board of directors.
Choice "c" is incorrect. According to the Code of Professional Conduct, a CPA may not serve on a company's board of directors if the CPA has any business connection with the company. The CPA would have a business connection with the company if the CPA audited a bank to which the company has applied for financing, and board approval is required for the financing to occur.
Choice "d" is incorrect. An auditor must be independent to perform any attestation service, including testing internal controls. A CPA's independence is impaired by business relationships with its client, including service on the client's board of directors.
Choice "b" is incorrect. An auditor must be independent to perform any attestation service, whether the client is public or nonpublic. A CPA's independence is impaired by business relationships with its client, including service on the client's board of directors.
