a)Why is independence so essential for auditors?
b) compare the importance of independence of CPA with that of other professional's such as attorneys.
c) Explain the difference between independence n appearance and in fact.
d)Assume that a partner of a CPA firm owns two shares of stock of a large audit client on which he serves as the engagement partner. The ownership is an insignificant part of his total wealth.
1. Has he violated the Code of Professional Conduct?
2. Explain whether the ownership is likely to affect the partner's independence in fact.
3. Explain the reason for the strict requirement about stock ownership in the rules of conduct.
e. Discuss how each of the following could affect independence in fact and independence in appearance, and evaluate the social consequence of prohibiting auditors from doing each one:
1- owing stock in a client company
2- having bookkeeping services for an audit client performed by the same person who does the audit.
3- Having the annual audit performed by the same audit team. ecpect for assistants, for 5 years in a row.
4- having the annual audit performed by the same CPA firm for 10 years in a row
5- having management select the CPA firm.
6- Recommending adjusting entries to the client's financial statements and preparing financial statemtns, including footnotes, for the client.
7- Having management services for an audit client performed by individuals in a department that is separate from the audit department.
f) which of 1 through 7 are prohibited by the AICPA code of professional conduct? which are prohibited by the Sarbanes- Oxley Act or the SEC?