Auditor Independence On A Corporation 's Financial Position And Its Financial Statements

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Independence Introduction Auditors provide comfort and assurance regarding a corporation’s financial position and its financial statements. The assurance field centers upon one common trait: trust. Trust is vital to an auditor because investors must feel confident that the financial statements accurately reflect the company’s financial standing. Auditor independence is the backbone behind the perceived trust and comfort an auditor provides while examining the financial statements. If an auditor impairs independence, how can an investor ensure that he or she is relying upon accurate information? Since trust is an essential part of the auditor-investor relationship, the government and accounting oversight boards have taken several measures…show more content…
By applying the most restrictive set of independence rules one improves the likelihood of impairment because as restrictiveness increases it becomes increasingly difficult to comply with the rules. In essence, one is being “conservative” in his or her application of the most restrictive set of rules. (REPHASE) PCAOB and AICPA The PCAOB and AICPA function in similar ways but differ in one core department. Title I of the Sarbanes-Oxley Act of 2002 created the PCAOB and states the purpose of the group is, “… to oversee the audit of public companies that are subject to securities laws, and related matters, in order to protect the interests of investors and further public interest in the preparation of informative, accurate and independent audit reports… (Sarbanes-Oxley Act 2002). The bill continues detailing the duties of the PCAOB throughout nine sections in Title I of the act. These duties include establishing or adopting standards including ethics and independence. It is also important to note that the PCAOB operates independently and its members are not considered agents of the Federal Government. However, the Securities and Exchange Commission (SEC) maintains “oversight authority over the PCAOB, including the approval of the Board’s rules, standards and budget” (About the PCAOB). In contrast, the AICPA oversees the audit of

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