Accounting Case Study: The AICPA Code Of Professional Conduct

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Case Study 5: What Lies Beneath The AICPA Code of Professional Conduct defines independence as consisting of independence of mind and independence in appearance. According to the AICPA Code of Conduct, Section 55 Article IV, An accountant member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. Moreover, a member who practices their accounting work in a public firm should be independent in fact and appearance when providing auditing and other attestation services (aicpa.org). According to the case study What Lies Beneath, I think that Betty did not show her professional skepticism since she built trust on her client, which she could not have as an auditor. As an auditor,…show more content…
The independence of mind or independence in fact means Betty has to have a state of mind that allow her to form an opinion without bias due to influence that compromises professional judgment. By having an independence of mind allowing an individual to perform his or her audit work with integrity, as well as, maintaining her objectivity and professional skepticism behavior. However, in this case, she did not have an independence of mind since she trusted Toby and she enjoyed working with him since he is also a CPA because it is easy for her to work with him compare to her other clients who do not have the accounting background. As a result, because of long-term relationship and trust that Betty has with Toby, it influenced her decision about the audit opinion. Additionally, to be independent in appearance Betty and her audit team must show unbiased professional judgment when she reviews her clients ' financial statements. Betty had Problems with independence in appearance because in the case study shown me that she has become too close to her client, Toby. Therefore, all auditors have to maintain their professional skepticism as well as maintain independence in their mental attitude and also independence in appearance to provide an unbiased opinion on…show more content…
My appropriate way that I would do during my audit process was that I would ask questions to Toby and his accountants to provide concrete evidence of each item that include in the miscellaneous expense. My team members and I must test the selected items or all the elements from the miscellaneous account by reviewing all the supporting documents such as receipts and invoices. Moreover, the audit team has to conduct the procedure to interview Toby and his staff to clarify all the suspicious about their financial statement reporting amounts. Even Betty and her team had questioned Toby and his employee several times about their miscellaneous expense, they have just realized heavily on Toby’s answers since they trusted him for having a long client relationship, and this was the reason that makes them decided not to investigate further. In my opinion, it is crucial for Betty and her team to investigate further about her client’s miscellaneous expense because it could help them to discover more inappropriate actions that Toby had done to his company’s financial statements. As a result, I think that because Betty did not practice an appropriate professional judgment as well as professional skepticism; she and her audit team have missed red flag in Toby’s fraud
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