An accounting firm is expected to act by its ethics so as to provide individuals as well as institutions with the most appropriate and uncompromised financial report of a company. For an auditing firm to provide genuine financial reports to the interested parties, it should be in a position to act freely. This implies that the auditing staffs and firms should not have any personal interest in the companies that they carry out a financial assessment which in turn aid in providing the most accurate financial report of an institution. The freedom to act objectively is termed as independence, whereby, the auditing firm and staff are at liberty to critically assess a company's financial status without being influenced by individual interests or factors as it requires the auditors to exercise integrity and objectivity.
The two cases have impaired the accounting firm independence. Firstly, for the company is at the risk of losing its independence due to the familiarity factor which involves auditing staff being familiar or in a relationship with a stakeholder such as the employees, officers or the directors of the company. In the first case, Don Moore who is a partner of the accounting company is in a relationship with Joan Scott who is a stock broker and a shareholder in the company. In this case, the relationship between Don Moore and Scott will significantly affect the company's independence. Additionally, because Scott has acquired shares in the company from the public company's client, the company's independence is under threat which arises from advocacy which occurs when the auditor promotes a client ( Knapp, 2007) . Additionally, in the second case, Mary Reed who is a new employee of the public accounting firm is a divorce to a husband who have common shares in the company and who has always been against her professional. In this case, the company's independence is compromised due to the relationship between Reed and her husband as well as the position of her husband in the company. It is essential to indicate that individuals with common shares have the right to share the company's profit as well as to make decisions which involve the board of directors ( Campbell& Houghton, 2005) . In this case, the company's decision-making process is compromised by the familiarity of the employee who is an auditor and the husband who is a key stakeholder in the company's board of directors. Additionally, with this case, the company's independence it at risk due to self-interest presented by Reed's husband who is a member of the director through the common shares that he poses in the company.
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The company is at risk of losing its independence due to the relationship between its stakeholders which in turn might infer with the integrity and objectivity of the company in preparing financial reports ( Knapp, 2011) . For example, Reeds husbands are always against her professional which in turn might influence the husband decisions on the board of directors due to his self- interest which in turn will compromise the company's independence. Additionally. Since Reed's acquired the shares through inappropriate procedures which involved using community property, Reeds might be persuaded to protect her husband, hence, providing false financial details which in turn will interfere with the company ethics as well as its independence. On the other hand, Scott is a stockbroker and can advocate for the client in an attempt to benefit herself which will automatically impair the company's independence. Additionally, the relationship between Scott and her boyfriend Moore who is a partner in the company wants as both are significant figures in the company as they have shared. Therefore, might propose policies and decisions that best suit their self-interests which will in turn in fear with the company's independences in making decisions that are not attached to individual interests or wants ( Knapp, 2011) .
In an attempt to protect the companies privacy, the company should develop new ethics and policies that provide a code of conduct as well as those that clearly stipulates the nature of relationships between the employees. Firstly, there is great urgency for the company to ensure that its stakeholders are not in any form of relationship besides work. For example, no stakeholder whether employees, director or client should engage in a long term or marriage relationship. The policy will, in turn, help the company from compromising its independence due to matters that surround familiarity among them are individuals in a long-term relationship or marriage such as in the two cases( Campbell& Houghton, 2005) . Additionally, the company should also limit its employees from acquiring stock as this will lead to independence problems that arise from the need to protect self-interests as well as cases of self-review. In self-review, the independence of an accounting company is compromised because the auditors evaluate their work. This might intern interfere with the financial reports whenever individuals want to protect their interests which in turn violets the accounting company policies that requires integrity in financial reports as well as a genuine financial status of a company. As a result, the company will suffer from dependency where decisions and financial procedures are based on people's interests, hence, need to protect the company's independent through limited stock possession among its stakeholders.
References
Campbell, T., & Houghton, K. A. (2005). Ethics and auditing . Canberra: ANU E Press.
Gray, I. (2007). The audit process: Principles, practice, and cases . London: Thomson Learning.
Knapp, M. C. (2011). Contemporary Auditing: Real issues and cases . Australia: South-Western/Cengage Learning. Top of Form
