Chapter 24 - Completion + Professional Judgment

Independence n the likelihood that one's judgment is

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Unformatted text preview: + Independence n The likelihood that one's judgment is affected by the client. Or n The degree to which one's judgment is affected by the client. n Independence: n In appearance – assurance n In fact – audit quality + What Affects Independence? n Individual n Financial interests – code n Familial interests – code n Managerial interests – code n Long relationships – rotation (SOX) n Future relationships – revolving door (SOX) n Audit Firm/Office n Size n Reputation n Expertise + What Keeps Auditors Independent? n Ethics n Skepticism n Professional Code of Conduct n Litigation Risk n Accountability/Review Process n Decision Aids n Training + Ethics n Ethics- A set of morals/values/principles upon which one evaluates rightness/wrongness of one's behavior. n Includes: honesty, integrity, fairness, respect, loyalty, justice, etc. n Problems? n gray areas, conflicting ethics n the ability to rationalize + Skepticism An attitude that includes a questioning mind and a critical assessment of evidence. "An auditor should not be satisfied with less than persuasive evidence because of a belief that management is honest" - SAS 99 n May include: A. Objectivity in evidence evaluation B. Discount ALL evidence C. Suspicion "Evaluate information (evidence) and keep a questioning mind in the context of (1) source credibility (knowledge, independence), (2) consistency with other information (evidence), and (3) general reasonableness” + For Thursday, 3/21 n Read Case 6 on Scholar n Focus on Biases/Heuristics n Review Chapter 10 (p. 294-302) + COSO Chapters...
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Independence n The likelihood that one's judgment is...

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