What Makes A Good Client Engagement?

The factor that plays the greatest role in determining auditor independence is independence in mind. Auditors may or may not appear to be independent, but if the auditor is truly independent in mind, then the auditor can remain objective and unbiased. The profession should consider tightening the Code of Professional Conduct to address the issue of an audit team member knowing a close friend that holds any position at the audit client. If this scenario arises, the firm can still audit the client, but the audit member with the close relationship won’t be able to be on the audit team.

1- Independence: - The internal auditor should have the independence in terms of organizational status and personal objectivity which permits the proper performance of his duties.

We are pulling back the curtains and shining the spotlight on a PO and youth who embody DOP’s mission to strengthen communities, create opportunity and change lives through Client Engagement. PO Felicia Finch of MFIS was assigned the case of 16 year old “Patrick” who in January 2017 was placed on 15-Months’ probation for a serious offense. Raised by his mother in a cramped two-bedroom apartment occupied by three other adults, Patrick became overwhelmed by his lack of privacy, but was overall, a good student who is enrolled in mainstream education. Although Patrick attends school regularly and does well academically, he struggled to “fit in” with his peers, and would not always turn in his homework to avoid being perceived as a “nerd”. Recognizing

Independence is extremely important, necessary, and appropriate because without an independent IAD, IAD’s objective of adding values and improving business operations cannot be achieved. Independence is also a key component in Attribute Standard. Accountability section states the chief audit executive’s responsibility to the management and audit committee. It is necessary and appropriate because it leads to significant communication between the CAE and top management and between the CAE and the Board; it also helps ensure that the standards and requirement of the internal auditing function is achieved.

One of the standards in Generally Accepted Auditing Standards is that the auditor must maintain independence in mental attitude in all matters relating to the audit. (AICPA, AU §150.09, para. 4) Independence is an essential standard for all auditors to maintain and when take on new roles. The public trusts the auditors with their proficiency and knowledge to bring more confidence to the public in reviewing companies’ financials. The accountants and auditors are consider trustworthy professionals. There are many studies that question accountants and auditors’ responsibility. Independence is one of the main challenges today and the second challenge is the inefficient functioning of account firms.

10. To promote independence, accounting firms should attach a psychological studies portion of training to continuing professional education. This would improve upper management’s ability to detect potential violations of independence.

Auditors face greater battles than deciding how to record debits and credits, or attempting to balance their stakeholders’ interests. The most important struggle occurs in the mind of every individual auditor, regardless of rank or status. The issue at hand involves an auditor’s duty to practice professional skepticism. Although it may seem easy to remain skeptical as an auditor, in reality, they face numerous barriers to fulfilling this duty. These barriers include but are not limited to: challenging high rank individuals both within the audit firm and at the client company, time constraints, budget constraints, fatigue and personal health concerns, lack of personal knowledge or skill, desire to please certain parties, and intimidation from others. First and foremost, this discussion will elaborate on both the time and budget constraints to professional skepticism, as they tend to go hand in hand. Following, the second section of this discussion will highlight a personal experience of applying professional skepticism throughout a winter quarter auditing internship. Third, as described in PCAOB Audit Staff Practice Alert No. 10, the PCAOB plans to explore meaningful ways to enhance auditor’s professional skepticism. Therefore, contained in section three is a proposal which provides justification for an implementation that may enhance the application of professional skepticism throughout the auditing profession. In culmination of discussing these examples,

According to Jackson et al. (2008), mandatory audit firm rotation might decrease the competition since the market share of the larger audit firms increases. Another negative effect is the potential mismatch between auditors’ offerings and clients’ needs resulting in opportunity costs. Next to this, audit firm rotation leads to specific audit firm avoidance by clients without having to fire them, this enables opinion shopping (Security and Exchange Commission, 2001).

The main disadvantages of audit firms providing services to their audit clients relate to potential adverse effects on the auditor’s independence. The auditor could be unwilling to provide services which would reduce their audit fees or cause the client to seek another auditor. The auditor could be unwilling to criticise something to the client which was provided by their consulting division. The auditor could be ‘blind’ to potential adverse impacts on the client’s accounting systems from products and services provided by their consulting division. Even if the consulting provided unquestionable benefits to the client, the relationship between the audit firm and the client could become ‘too cosy’, and discourage the client from considering other auditors. Finally, the auditor could be reluctant to qualify the audit report for fear of losing lucrative fees from consulting services. If this occurs, the audit is less valuable because the auditor is less independent.

Literature Review. The author used a systematic review of literature in the research. The researcher examined studies of Gill and Cosseral (1996), The Code of Ethics for Professional Accountants, and Guidance Note on Independence of Auditors to analyze the word “independence” in depth. The author stated that the term might bring a lot of confusion (p. 307). The term should emphasize that the professional is free from financial relationships.

My name is Yunyao Zhu, the audit manager of the audit firm Reliableaudits & Co. whom has been allocated to the audit of the companies below which I will further discuss each company situation review. I will describe the possible threats to companies’ independence with respect to appropriate section of the Professional Code of Ethics. Lastly, under each company review, I will also propose necessary recommendations in order for Reliableaudits & Co. to safeguard against potential independence threats that have been identified.

The audit firm has its responsibility also – that of not providing accounting or bookkeeping services to any client it audits. Neither can the firm represent the client in a legal matter. This encourages stability and boost user confidence in the market. This covers the area of scope of interest. There should be no fee arrangements made to pay the audit firm based on results of advice it provides to a client. The only payment arrangements should be related to the audit fees charged to the client.

Independent audits provide many different stakeholders with a level of confidence in the financial information being provided by a company. Decisions to invest in the company, provide financing to the company, or even work with the company are often make by relying on information audited by an independent firm so it is imperative that this information be accurate and reliable. Auditors must adhere to strict professional standards and maintain professional ethics in order to perform their duties with care. In addition, proper audit planning and risk assessment can help prevent scandals such as those that occurred at Enron and WorldCom.

The primary responsibility of the audit committee is to serve as an independent and objective body to monitor a company’s financial reporting process and internal control system (BRC, 1999). In order to properly serve one’s role as an independent audit committee member, one must be free from all personal connections and/or material financial connections to the company or the company’s key executives (Persons, 2009, peer reviewed). A typical expectation of audit committee effectiveness is that independent audit committee members or directors would warrant a lower likelihood of financial restatements. This expectation is supported through prior investigation of empirical evidence (Abbott et al., 2000, peer reviewed; Beasley et al., 2000, peer reviewed). Specifically, Abbott et al (2004, peer reviewed) and Persons (2009, peer reviewed) both find a negative correlation between audit committee independence and the likelihood of financial reporting restatement. These studies support the idea that an independent audit committee contributes positively to the quality of financial reporting and effective monitoring of internal controls.

---The external auditing profession as a whole has became more concentrated on maintaining auditor independence and it is now one of the cornerstones of quality auditing. One way that independence can be violated is when an auditor shows bias towards an important