e. Discuss how each of the follwing could affect independence of mind and indepe

Question

e. Discuss how each of the follwing could affect independence of mind and independence in appearance, and evaluate the social consequences of prohibiting auditors from doing each one:

(1) Owning 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, except 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 statements, including footnotes, for the client

(7) Having management services for an audit client performed by individuals in a department that is separate from the aduit department

f. Which of (1) through (7) are prohibited by the AICPA Cody of Professional Conduct? Which are prohibited by the Sarbanes-Oxley Act or the SEC?

Explanation / Answer

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