This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Week 2: Ethics and Legal Responsibility - Lecture Ethics and Legal Respobsibility Rule 101 Independence | Professional Ethics | Legal Liability This week we more closely examine the rules by which the profession requires CPA auditors to live. The professional is challenged to comply with federal regulations, AICPA rules, statutory laws, and the common law. A violation of any of these can place the CPA in professional jeopardy. Independence is very important to our roles as auditors because the users of financial statements want to be sure that we take an unbiased viewpoint when we perform our audits. Because of its importance, independence is the first rule of conduct. So, to protect our independence, we must be both independent in fact and independent in appearance. Independence in fact exists when the auditor is actually able to maintain an unbiased attitude throughout the audit, whereas independence in appearance is dependent on others' interpretation of this independence and hence their faith in the auditor. The profession is a blend of disciplines from accounting to consulting to auditing and more. The public depends on the professional judgment of the hardworking CPA auditor to give the investing public a greater understanding of the companies they are evaluating. As such, CPA auditors must have the knowledge and the ability to understand and access the value of the client's financial statements. Who in the U.S.A. has not heard of the downfalls of Arthur Andersen, Enron, Worldcom, Tyco, and Bernie Madoff, among countless others? As a result of their misadventures, new legislation has greatly affected the way business is done. It has also opened up new opportunities for those in the accounting profession. A pitfall for CPAs to navigate is keeping their independence and integrity intact when the client is pushing for more control over what is reported....
View Full Document
- Spring '10
- Financial audit, External auditor, Auditor's report