Question

You are an audit manager with the firm of Wu, Potter and McKinley, PAs. You and Ray St. Claire, a manager with another PA firm, are having a discussion about auditor independence. Ray says, “On the one hand, the public seems to be demanding more and more assurance from us about more and more aspects of a client’s operations, but to maintain our practice in today’s environment we have to be competitive to be able to attract new clients.”

Required:
a. Identify and briefly explain the competitive practice on the part of auditors to which Ray is referring.
b. Why is this perceived as a threat to auditor independence and the quality of audits?
c. With reference to parts a. and b., what could a client do, at least in theory, to take advantage of this situation? What is the reason this strategy might not work?
d. What does the CGA-Canada code of ethics say about this issue?



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  • CreatedJanuary 09, 2015
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