Chen Fang, has been the Deloitte Audit Partner for Electra Components, Incorporated (ECI) for the past three years. ECI is a mid-size private corporation. Chen is recruited by and takes a position at ECI as the Senior Vice President for Finance. Chen severs all ties to Deloitte upon taking the new position.

Required: Please answer these questions (making appropriate citations to the AICPA Code of Professional Conduct as needed).

1. Is independence impaired for Deloitte?
2. Are there any safeguards that can be taken by Deloitte to allow it to continue audit work for ECI? What are those safeguards?
3. Would your answers be different if ECI was a public company? Why?