Why is an auditor’s independence so essential? How does the Chartered Professional Accountant’s need for independence differ from that of other professions?
Provide two examples from current events where independence was an issue in an audit of a public company.
Pronouncements issued by the Committee on Accounting Procedures:
A. Dealt with specific accounting and reporting problems.
B. Were based on exposure drafts and public comment letters.
C. Originated from congressional studies and SEC directives.
D. Were the outcome of research studies and a theoretical framework.
An internal accountant should always take the following step after exhausting all avenues of appeal within the organization when there is a difference of opinion with top management on an accounting or financial reporting matter:
A. Inform the SEC
B. Terminate employment with the entity
C. Seek legal advice before taking any action
D. All of the above
The Independence Principle in the AICPA Code applies to:
A. All accountants and auditors
B. All CPAs regardless of professional services
C. All CPAs who render attestation services
D. All members of the audit committee
According to the AICPA, the CPA Web Trust service is needed to
O Certify that a website is completely trustworthy.
O Assure transaction integrity regarding e-commerce.
O Assure that websites meet the Internet protection standards.
O Manage growth in international commerce.
In a review engagement, the accountant should establish an understanding with a nonissuer, in writing, regarding the services to be performed. The understanding should include all of the following except a
O Provision that the engagement cannot be relied upon to disclosure errors, fraud, or illegal acts.
O Description of the nature and limitations of the services performed.
O Description of the report the accountant expects to render.
O Provision that any errors, fraud, or illegal acts that come to the accountant’s attention need not be reported.
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