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In: Accounting

Review the following resources by clicking on these links: AICPA Code of Professional Conduct - This...

Review the following resources by clicking on these links: AICPA Code of Professional Conduct - This website provides auditors with the principles and rules for conducting professional services Journal of Accountancy - This site provides a current article on Corporate Ethics and Compliance Programs Independence Guide - The Code of Professional Conduct focuses special attention to auditor independence. This provides a guide on independence. A Framework for Auditor Independence - The Journal of Accountancy's article on Auditor Independence Code of Ethics - The Institute of Internal Auditors has a Code of Ethics that has many similar principles and rules to the Code of Professional Conduct Then, apply what you have learned to answer the following questions. Is it possible for an auditor to follow all the rules of independence in accordance with the Code of Professional Conduct and still not be independent according to Generally Accepted Auditing Standards (GAAS)? What is meant by independent in mental attitude? Your answers should be detailed and provide examples. Attach your answers to this assignment

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Expert Solution

  • An independent auditor plans, conducts, and reports the results of an audit in accordance with generally accepted auditing standards (GAAS). Auditing standards provide a measure of audit quality and the objectives to be achieved in an audit. Auditing procedures differ from auditing standards. Auditing procedures are acts that the auditor performs during the course of an audit to comply with auditing standards.
  • A member in public practice shall be independent in the performance of professional services as required by standards promulgated by bodies designated by Council.

  • Independence of mind is the state of mind that permits a member to perform an attest service without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism.

For example, the phrase “without being affected by influences that compromise professional judgment” is not intended to convey that the member must be free of any and all influences that might compromise objective judgment. Instead, the member should determine whether such influences, if present, create a threat that is not at an acceptable level that a member would not act with integrity and exercise objectivity and professional skepticism in the conduct of a particular engagement or would be perceived as not being able to do so by a reasonable and informed third party with knowledge of all relevant information.

Independent in mental attitude :

  Independent mental attitude refers to a state of mind in which the CPA is totally unbiased with respect to the client and the financial information under audit.

Although internal auditors are employees of the organization for which their audits are performed, internal auditors should be independent of the function being examined and should report their findings to a level high enough in the organization to allow the auditor to be free from influence by the party, or parties, being examined.


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