Académique Documents
Professionnel Documents
Culture Documents
4-18
a.
(1)
b.
(3)
c.
(1)
4-19
a.
(1)
b.
(3)
c.
(3)
4-20
Service
Providing bookkeeping services to a public company. The
services were pre-approved by the audit committee of the
company.
Providing internal audit services to a public company that is
not an audit client.
Designing and implementing a financial information system
for a private company.
Recommending a tax shelter to a client that is publicly held.
The services were pre-approved by the audit committee.
Providing internal audit services to a public company client
with the pre-approval of the audit committee.
Providing bookkeeping services to an audit client that is a
private company.
a.
b.
c.
d.
e.
f.
Violation?
Yes
No
No
No *
Yes
No
* Recommending tax shelters is not prohibited, but has the potential to impair
independence.
4-22
a.
b.
c.
d.
e.
f.
4-22, continued
g. No violation. Rule 502 on advertising permits the use of promotional efforts
designating specialties or areas of practice as long as the advertising is not false,
misleading or deceptive.
h. No violation. The only questionable part of the information is the statement by the ecommerce article that Gutowski is an e-commerce expert. It may be difficult for
Gutowski to demonstrate that he is in fact an expert, but the interpretations of
Rule 502 no longer preclude him from making such a statement.
i. Violation. Rule 301 does not distinguish between audit, tax, and management
advisory services-related working papers. He has therefore violated the rules.
j. No violation. There are no longer rules restricting such practice.
4-24
a.
He has violated the Code of Professional Conduct. Rule 101 prohibits any
direct ownership by a partner or shareholder.
Such a small ownership is unlikely to have any impact on a partner's
objectivity in evaluating the financial statements. It is unlikely to affect the
partner's independence in fact.
Such ownership could affect the appearance of independence and
therefore impact the reputation and credibility of auditors. Additionally
these strict requirements eliminate any controversy as to the line between
a material and immaterial ownership. It also shows outsiders the
importance of independence to auditors and therefore hopefully improves
the reputation of the profession.
4-24
(continued)
INDEPENDENCE IN
FACT
INDEPENDENCE
IN APPEARANCE
1.
Minor, if any.
2.
3.
There may be an
absence of a careful
independent check of
the entries or preparation of the
statements because
they were originally
prepared by the
auditor.
4.
5.
CONSEQUENCES
INDEPENDENCE IN
FACT
INDEPENDENCE
IN APPEARANCE
6.
7.
CONSEQUENCES
b. The AICPA Code of Professional Conduct prohibits only e(1). The SEC prohibits e(1)
if the person owning the stock is a member of the engagement team or is a
partner in the office of the partner primarily responsible for the audit engagement.
The SEC also prohibits e(2), and e(3) would also be considered a violation if the
adjusting entries were so extensive that they are, in essence, bookkeeping
services. The SEC also prohibits the management services in e(4) if they are one
of the nine nonaudit services prohibited by the SEC. Because the Sarbanes
Oxley Act requires that the audit committee select the auditor, e(7) is now also a
violation of SEC rules.,