Q1
Two examples of activities that may not affect the independence of mind but may affect the independence in appearance are being in ownership of a financial interest in the audited client and dependence upon a client for a large percentage of audit fees. An auditor who has any financial connections with a company or an individual, whose financial records are to be audited, may simply perform his or her duty of auditing without any form of bias but to the stakeholders, it might appear to them that the auditor will definitely not perform the auditing with sincerity and confidentiality. In the second activity, if a client or a company pays a large amount of fee to the auditor, the stakeholders might take it as a form of bribe so that the audit may be done in favor of the client or the company’s administration which might not be true to the auditor’s intention.
Q2
There is no assurance of independence from a CPA if his or her fee is dependent on the client. The main task of a CPA is usually to maintain and monitor financial records of financial institution or an individual. The integrity of a company’s financial records is at risk when the fee of the CPA is determined by the company or the client because the chances of the CPA working towards pleasing certain individuals for a pay rise are high. The CPAs will always want to be in good terms with the client they work for in order to secure their jobs. Therefore, their independence while executing their duties is highly compromised and cannot be depended on by other stakeholders. For instance, a corrupt manager will promise a CPA a pay rise so that the CPA may interfere with the company’s financial records to conceal any acts of vandalism.
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Q3
In a case where I realize that I am incompetent to audit certain areas of a client I had previously agreed to work for due to complexity of the industry, then I would demand for a pay rise so that I may look for a more competent CPA to tackle the areas I am unable to tackle and pay him or her. Secondly, I would audit the areas I am competent with and then advice the client to call in another CPA to audit the remaining complex areas. Alternatively, I would suggest that the client looks for a more competent CPA who would be able to audit all the areas with much ease. For example, the client should look for a CPA who has fully covered all the levels of CPA courses and exams because such a CPA would be in a better position to efficiently audit all the areas in the industry.
Q5
The public accounting profession is composed of trained accountants who serve clients such as businesses, company’s, non-governmental organizations and individuals. Persons intending to join accountancy need to be innovative and able to come up with alternative expenditure methods because the financial state of the whole world is changing and for a business to do well it must adapt to the changes. Accountants should also be good in communication. A good accountant should be able to convey complex information in the most straightforward manner which can be easily understood by a common employee. The public accounting profession also calls for credibility and integrity. Any business entity or company would prefer an accountant who can be trusted and who can execute his or her duties in an unquestionable way. Enthusiasm is also a key factor which is considered for accountants. An accountant should be able to bring appositive energy to the business or company to push it forward towards achieving its goals and targets.
