Presentation Takeaways
Does the SEC plan to strengthen or relax independence rules?
Relax.
Does providing tax services to an audit client impair independence?
No.
What is an example of financial interests in an attest client?
shares of stock, mutual fund shares, debt security issued by an entity partnership units; stock rights; options or warrants to acquire an interest in an attest client; or rights of participation, such as puts, calls, or straddles.
Can auditors charge commissions for recommending third-party products/services to clients?
No.
What branch of the board of directors should be most concerned with auditor independence?
Is an auditor’s independence impaired if auditing a company from which the auditor received student loans?
Currently yes. Under the new proposal by the SEC, it would no longer impair independence.
What is the difference between ‘immediate family’ and ‘close relatives’ according to the AICPA independence rules?
Answer: immediate family includes a spouse or equivalent and dependents - immediate family members generally follow the same rules you follow.
Close relatives include siblings, parents, and nondependent children - subject to some employment and financial restrictions.
Does providing bookkeeping services preclude an auditor from auditing that client's financial statements?
Yes.
What were the two firms were involved in the cases we presented on?
RSM & KMPG
Is independence impaired if an attest client owes the firm fees for professional services that have already been performed?
Yes, for services rendered over a year ago
What do you do if no specific guidance on a particular independence issue exists?
Apply the conceptual framework on independence.
How long does an auditor of a client have to wait before taking a job in a financial reporting role with that client?
How many years is the UK proposing for audit firm rotation?
7 years.
Is independence impaired if a client took the audit partner on a skiing trip?
Yes. The acceptance of gifts impairs independence.
What percentage of a firm's total revenue from one client causes independence to be impaired?
15%
Who is the current chairman of the SEC?
Jay Clayton
How much did KPMG earn over 19 years of being Carillion's auditor?
29 million euros
Is independence impaired if an auditor has a joint closely held investment with an attest client that is immaterial to his net worth?
Independence is NOT impaired because the joint closely held investment must be material to your net worth
What if your immediate family receives a financial interest as a result of an inheritance or a gift from an attest client and your immediate family is able to dispose of it within 60 days?
Independence is impaired because you are required to dispose of the interest no later than 30 days after you become aware of it and have the right to dispose
What are 3 of the 5 prohibited non-audit services an auditor can provide to a client?
Bookkeeping, internal audit, valuation services, actuarial services, financial information system design and implementation.