Question.3449 - The debate of whether an auditor who performs non-attest services (e.g. Consulting) for an audit client will have their independence impaired has been going on for some time in the accounting profession. While Sarbanes-Oxley Act of 2002 expressly restricts auditors from performing consulting and other non-attest services for their audit clients, the AICPA does not have such stringent restrictions.Required: Present an argument why you believe that performing non attest services for an audit client would or would not impair an auditor’s independence for audits performed under either the PCOB auditing standards OR the AICPA auditing standards.
Answer Below:
DiscussionThe xxxxxxxxx of xxx auditing xxxxxxxxxx is xxxxxxx dependent xx the xxxxxxxxxx surrounding xxx possible xxxxxxxxxx of xxxxxxx independence xxxxx rendering xxxxxxxxxx services xxxxxxxx Oxley xxx of xxxxxxxxxxx the xxxx auditing xxxxx which xxxxx specifically xxxxxx auditors xxxx offering xxx audit xxxxxxxx like xxxxxxxxxx to xxxxx customers xxxx ban xxx its xxxxxxxxxx from xxx idea xxxx providing xxxx services xxxxx cause x conflict xx interest xxxxx affect xxx auditor's xxxxxxxxxx and xxxxxxxxxxx The xxxx demerit xx that xxxxxxxxx managerial xxxxxxxxx among xxx auditors xxxxx result xx a xxxxxxxxx report xxxx is xxxxxxxxxxx Whittington xxxx However xxx AICPA's xxxxxxxx rules xxx more xxx permitting xxxxxxxx to xxxxx specified xxxxxxxxxxxxxxx services xx long xx precautions xxx taken xx reduce xxx possibility xx compromised xxxxxxxxxxxx Among xxxxx precautions xxx measures xx guarantee xxxx the xxxxxxxxxx of xxx audit xxxxxx makes xxxxxxx on xxx services xxxx are xxx attested xxx that xxx auditor xxxxx no xxxxxxxxxx responsibilities xxxxxxxxxxx Pany xxxxxxxxxxxx the xxxxxxxxxxx of xxxxxxxxxx independence xxxxxxxx despite xxxxx precautions xxx auditor xxx unconsciously xxx the xxxxxxxx goodwill xxxxx all xxxx which xxxxx make xx more xxxxxxxxx for xxxx to xxxxxxxx the xxxxxxxx financial xxxxxxx objectively xxxx independence xx mostly xxxxxx upon xx a xxxxxxxx of xxxxxxxxxx as xxxx as xxxx Even xx independence xx upheld xx practice xxx hint xx a xxxxxxxx of xxxxxxxx could xxxxx public xxxxx in xxx auditing xxxxxxx Whittington xxxx ReferencesWhittington x R xxxx K xxxxxxxxxx of xxxxxxxx and xxxxx Assurance xxxxxxxx st xx McGraw xxxx Peer xxxxxxxx Your xxxxxxxx highlights x valid xxxxx regarding xxx potential xxxxxxxx of xxxxxxxx performing xxxxxxxxxx services xxx an xxxxx client xxxxxxxxxxxx in xxxxx of xxxxxxxxx audit xxxxxxx by xxxxxxx a xxxxxx understanding xx the xxxxxxxx operations xxxxxxx and xxxxx By xxxxxxxx in xxxxxxxxxx services xxxx as xxxxxxxxxx auditors xxxxx indeed xxxxxx valuable xxxxxxxx into xxx client x internal xxxxxxxxx which xxx allow xxxx to xxxxxxx a xxxx informed xxx effective xxxxx This xxxxx knowledge xxx enable xxxxxxxx to xxxxxxxx areas xx risk xxxx accurately xxxxxxx to x more xxxxxxxx audit xxx issue xx independence xxxx beyond xxxxxx separating xxxxxxxxx or xxxxxxxxx established xxxxxxxxxx Independence xx both x matter xx fact xxxxxx independence xxx perception xxx appearance xx independence xxx it xx a xxxxxxxxxxx of xxxxxx trust xx the xxxxxxxx profession xxxx with xxxxxxxxxx like xxxxxxxxxxx the xxxxxxxxx who xxxxxxx consulting xxxxxxxx from xxxxx conducting xxx audit xxx risk xx perceived xxxxxxxxx of xxxxxxxx remains xx the xxxxxx or xxxxxxxxxxxx believe xxxx auditors xxx too xxxxxxx involved xx the xxxxxx s xxxxxxxxxxxxxxx processes xxxxxxx consulting xx can xxxxxxxxx their xxxxxxxxxx in xxx auditor x impartiality xxxxxxxxxx of xxx safeguards xx place xxx risk xx a xxxxxxxxxxx threat xx substantial xx the xxxx provides xxxxxx or xxxxxxxxxx services xxxx influence xxx client x financial xxxxxxxxx or xxxxxxxx controls xxxxx is x danger xxxx auditors xxx end xx auditing xxxxx own xxxx either xxxxxxxx or xxxxxxxxxx This xxxxx lead xx bias xxxxxxx intentional xx unintentional xx auditors xxx be xxxx critical xxxx assessing xxx outcomes xx decisions xx systems xxxx helped xxxxxxxxx Even xx different xxxxx perform xxx consulting xxx auditing xxxx the xxxxxx affiliation xxxx the xxxx firm xxx still xxxx rise xx concerns xxxxx objectivity xxx impartiality xxxxxxxxxx bodies xxxx as xxx Securities xxx Exchange xxxxxxxxxx SEC xxx the xxxxxx Company xxxxxxxxxx Oversight xxxxx PCAOB xxxx established xxxxxxxx independence xxxxx than xxxxx provided xx the xxxxx especially xxxx it xxxxx to xxxxxx companies xxxxx regulations xxx in xxxxx precisely xx mitigate xxxx actual xxx perceived xxxxxxx to xxxxxxxxxxxx The xxxxxxxxxxxxxx Act xx for xxxxxxxx restricts xxx types xx non-audit xxxxxxxx that xxxxxxxx can xxxxxxx to xxxxx audit xxxxxxx This xxxxxxxxxxx was xxxxxxxxxx in xxxxxxxx to xxxxxxxxxxxx corporate xxxxxxxx where xxx lack xx clear xxxxxxxxxx between xxxxx and xxxxxxxxxx services xxx one xx the xxxxxxxxxxxx factors xxxxx non-attest xxxxxxxx can xxxxxxx valuable xxxxxxxx that xxx contribute xx a xxxx comprehensive xxxxx the xxxxxxxxx threats xx independence xxxx real xxx perceived xxxx it xxxxxxxx to xxxxxxxxx manage xxx relationship xxxxxxx audit xxx consulting xxxxxxxx It xx essential xx prioritize xxx auditor's xxxxxxxxxxx and xxxxxxxx the xxxxxxxx confidence xx the xxxxxxxxx of xxx audit xxxxxxxxxx in xxxxx of xxxxxxxxxx standards xxxxx at xxxxxxxx the xxxxxxx levels xx independence xxx impartialityMore Articles From Accounting
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