The independence of the auditor is paramount in the conduct of the auditing process. Examining the books of account by an external auditor provides credibility to the published financial reports to the users. Thus the auditors are supposed and must be seen to work in an environment that encourages objectivity in decision making on the variety of issues in the financial statements. Auditors must then be independent in appearance and fact. An independent auditor can reach an opinion without external pressures and bias. Also, an independent auditor can approach the work in an approach that questions everything and anything that should be subjected to subjectivity. It is imperative to ensure the engagement team is independent and any member who may have challenges on working as such should be replaced to ensure YOUCPA is in a position to give an honest and unbiased opinion on the financial statements of the client,
Mary Ball, a senior partner in the auditing firm, is independent since she has no information to impact her independence negatively. She has no self-interest, nor exhibited familiarity or intimidation threat emanating from the client.
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Bill Davis, a managing partner at the auditing firm, is not independent because as the audit manager in the client's business, he is familiar with the client's operations. Thus there is a likelihood that his opinion and objectivity might be influenced by the experiences he has had with the client.
David Youssef, the manager, taxation services at YOUCPA and holds a similar position in the client's firm is independent since he does not portray any familiarity threat and self interest in the client's business operations.
Yewel Faraday is an independent member since he does not exhibit any familiarity, intimidation or self-interest threat.
As the audit supervisor to the client, Frank Bell is not an independent member of the engagement team. His wife is an employee at the client's firm, and there is a likelihood of self-interest threat arising from the connection he has with the client. There is someone with a close association with the auditor who is interested in the client's business which may negatively impact Frank's ability to maintain objectivity in the assignment.
Beth Wright, a supervisor, assigned to the audit engagement, is not independent because she has interests in the client's firm as an investor. She owns a mutual fund that has invested in the client's business, and as such, she would be inclined not to report negative findings on the financial statements of a business due to the impact such news would have on the investment. A self-interest threat is visible on the Beth.
Wilbur Singation, an auditor in the auditing firm, is an independent member of the engagement team. He has not exhibited any familiarity, intimidation or self-interest threats that can inhibit his honest and unbiased opinion on the client's books of account.
Sam Martin, an auditor in the firm, is not an independent team member due to the self-interest threat and familiarity threat arising from a close family member in the client's company. The cousin has a direct interest in the client's business and may have shared information to Sam which makes him familiar with the client's business operations.
Mary Franks is an auditor at YOUCPA and is independent since she has not shown any familiarity or intimidation or self-interest threats.
Phil Cole, an auditor at YOUCPA, is not independent due to familiarity threat arising from his history as an employee at the client's company. He was an accountant at Fresno Freezer, and he produced the accounts that are now subjected to audit at YOUCPA. Phil cannot disclose any negative aspects in the accounts that can directly implicate him. He cannot form part of an audit team that amount to self-audit in direct contravention of the principle of auditor independence.
Callie Smart and You are an independent member since they do not exhibit any familiarity, intimidation or self-interest threat.
