Why Independence Is Important And How It Is Vital For The Success Of Our Accounting Firm

979 WordsOct 14, 20164 Pages
At MJLK, LLP we are further educating ourselves on Rule 101 of the AICPA Code of Professional Conduct: Independence. To properly learn more about why independence is important and how it is vital for the success of our accounting firm we analyzed the PwC Securities LLC case provided by you. Our firm decided to focus on four key topics to hammer in the idea of independence: SEC punishment, financial services, value-added fee arrangements, and prohibited tax services. 1) SEC Punishment The Securities and Exchange Commission (SEC) acted in a timely and appropriate manner when addressing the forbidden arrangements that were discovered from PwC and PwCS. Although the punishments were deemed harsh, the repercussions were appropriate in this case. The harsh nature of the punishments stemmed from the speculation of the SEC that PwC and Coopers & Lybrand officials were well aware that the fee arrangements that were made were banned. The AICPA and SEC govern the rules regarding independence and conflicts of interest that may arise and these companies were well aware of this governance and oversight prior to arranging the contingent fees. There is a distinct breach of independence that is formed from the actions that were made, that deserves a harsh punishment from the SEC. Without punishment from the SEC, there would be a lack of oversight with controlling companies from making arrangements to compromise independence and properly integrate internal controls. There were several

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