Auditing & Ethics

987 Words4 Pages
Koger Properties, Inc. 1.) The SEC has a strong case against Goodbread for violating his independence because as it is stated on the AICPA’s website, “Independence shall be considered to be impaired if: During the period of the professional engagement a covered member was committed to acquire any direct or material indirect financial interest in the client.” (aicpa.org 101-1). In Goodbread’s case this refers to the fact that he had shares of stock (direct financial interest) in his possession when he was the audit engagement partner who oversaw the audit of Koger Properties, Inc. Under the Generally Accepted Auditing Standards (GAAS) there are three sections, General Standards, Standards of Fieldwork, and Standards of Reporting. Under…show more content…
Parliament may have seen an opportunity for auditors to “cook” the books, which would cause those companies to pay more taxes. During the 19th century you had the rise of the United States, and Great Britain did not want to look weaker than the US. If companies were paying more money in taxes, then Great Britain would be a stronger nation compared to the newly founded United States of America. If the auditors of today followed the same rules they did in Great Britain during the 19th century, then America would be in trouble. With such a competitive and strong capitalistic market, it would be hard to not be tempted to alter the financial statements of publically traded companies if there were no independence standards. Today’s business world obviously holds independence of auditors to be important or else Michael Goodbread would have never been investigated by the SEC. If independence was not viewed as an important issue in the field of auditing then there would not be rules and regulations strictly forbidding it. With the scandals of Enron, WorldCom, Deloitte and Touche, and others it is apparent that not all auditors act in an ethical manner. With the SEC and other organizations cracking down on these issues it will hopefully clean up the image of auditing in the future. Works Citied Aicpa.Org. 12 Jan. 1988. American Institute of Certified Public
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