Jackie Hardy, CPA, has a brother, Ted. in the retail clothing business. Ted ran the business as its sole owner for 1O years. During this 10-year period. Jackie helped Ted with various accounting matters. For example, Jackie designed the accounting system for the company, prepared Ted's personal income tax returns (which included financial data about the clothing business). and recommended various cost control procedures. Ted paid Jackie for all these services. A year ago. Ted markedly expanded the business; Ted is president of the corporation and also chairs the corporation's board of directors. The board of directors has overall responsibility for corporate affairs. When the corporation was formed, Ted asked Jackie to serve on its board of directors. Jackie accepted. In addition, Jackie now prepares the corporation's income tax returns and continues to advise her brother on accounting matters. Recently. the corporation applied for a large bank loan. The bank wants audited financial statements for the corporation before it will decide on the loan request. Ted asked Jackie to perform the audit. Jackie replied that she cannot do the audit because the code of ethics for CPAs requires that she be independent when providing audit services.

REQUIRED:

a. Why is it important that a CPA be independent when providing audit services?

b. Which of Jackie's activities or relationships impair her independence?