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Chapter 24 - Completion + Professional Judgment

Or n the degree to which ones judgment is affected by

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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
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+ 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 n Conflicting Services - SOX
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+ 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
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+ 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
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+ 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” Note: Keep the feelings out of it!
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+ 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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