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 xxx Pany 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 amp xxxx Nevertheless xxx possibility xx diminished xxxxxxxxxxxx persists xxxxxxx these xxxxxxxxxxx The xxxxxxx may xxxxxxxxxxxxx put xxx client's xxxxxxxx above xxx else xxxxx would xxxx it xxxx difficult xxx them xx evaluate xxx client's xxxxxxxxx figures xxxxxxxxxxx True xxxxxxxxxxxx is xxxxxx looked xxxx as x question xx perception xx much xx fact xxxx if xxxxxxxxxxxx is xxxxxx in xxxxxxxx any xxxx of x conflict xx interest xxxxx erode xxxxxx trust xx the xxxxxxxx process xxxxxxxxxxx amp xxxx nbsp xxxxxxxxxxxxxxxxxxxxx O x amp xxxx K xxxx Principles xx Auditing xxx Other xxxxxxxxx Services xxxx st xx McGraw xxxx nbsp xxxx Response xxxx argument xxxxxxxxxx a xxxxx point xxxxxxxxx the xxxxxxxxx benefits xx auditors xxxxxxxxxx non-attest xxxxxxxx for xx audit xxxxxx particularly xx terms xx enhancing xxxxx quality xx gaining x deeper xxxxxxxxxxxxx of xxx client's xxxxxxxxxx systems xxx risks xx engaging xx non-attest xxxxxxxx such xx consulting xxxxxxxx could xxxxxx obtain xxxxxxxx insights xxxx the xxxxxx rsquo 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 rsquo x decision-making xxxxxxxxx through xxxxxxxxxx it xxx undermine xxxxx confidence xx the xxxxxxx rsquo 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 xxxxx s xxxxxxxxx reporting xx internal xxxxxxxx there xx a xxxxxx that xxxxxxxx may xxx up xxxxxxxx their xxx work xxxxxx directly xx indirectly xxxx could xxxx to xxxx whether xxxxxxxxxxx or xxxxxxxxxxxxx as xxxxxxxx may xx less xxxxxxxx when xxxxxxxxx the xxxxxxxx of xxxxxxxxx or xxxxxxx they xxxxxx implement xxxx if xxxxxxxxx teams xxxxxxx the xxxxxxxxxx and xxxxxxxx work xxx shared xxxxxxxxxxx with xxx same xxxx can xxxxx give xxxx to xxxxxxxx about xxxxxxxxxxx and xxxxxxxxxxxx Regulatory xxxxxx such xx the xxxxxxxxxx and xxxxxxxx Commission xxx and xxx Public xxxxxxx Accounting xxxxxxxxx Board xxxxx have xxxxxxxxxxx stricter xxxxxxxxxxxx rules xxxx those xxxxxxxx by xxx AICPA xxxxxxxxxx when xx comes xx public xxxxxxxxx These xxxxxxxxxxx are xx place xxxxxxxxx to xxxxxxxx both xxxxxx and xxxxxxxxx threats xx independence xxx Sarbanes-Oxley xxx of xxx instance xxxxxxxxx the xxxxx of xxxxxxxxx services xxxx auditors xxx provide xx their xxxxx clients xxxx legislation xxx introduced xx response xx high-profile xxxxxxxxx scandals xxxxx the xxxx of xxxxx boundaries xxxxxxx audit xxx consulting xxxxxxxx was xxx of xxx contributing xxxxxxx nbsp 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 impartiality xxxx nbspMore Articles From Accounting
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