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Comment this post from VS

The Independence Standards Board Standard No. 1: Independence

“Any auditor with the intentions of being an independent auditor within the securities acts administered by the SEC must disclose to the audit committee or the board of directors all relationships between the auditor and related entities and the company and its related entities that in the auditor’s professional judgment may reasonably thought to bear on independence.” (Independence Standards Board Standard No.1 1999) Also, there must be confirmation in a letter that the professional judgment is independent of the company and is within the “Acts” (administered by the SEC) and the letter must cover that auditor’s independence with the audit committee. (Independence Standards Board Standard No.1 1999)

The above communications for auditors and audit committees of companies that are registering for the first time must be given before the company’s initial offering of securities to the public, and must cover all of the company’s financial statements for time periods following the effective date of the standard which must be included in a written statement of registration for the initial public offering of securities whether the auditor is the current auditor or an auditor that came before the current one. (Independence Standards Board Standard No.1 1999)

Auditors must be independent so they can make unbiased decisions. If an auditor makes investment decisions on behalf of clients or has discretionary authority over investment decisions, then they can be biased and are not considered independent. (Independence and Conflicts of Interest n.d. AICPA) The auditor can never make a transaction to buy or sell a client’s investment, nor can they have custody of assets of the audit client. (Independence and Conflicts of Interest n.d. AICPA) If the auditor has friends or family within the company or any interest in the company, they may make biased decisions even though they may appear to be independent.

Auditors must be independent. They must not have any interest whatsoever in the financials of the company. They must be able to render a completely professional and unbiased decision of the accuracy of the financial statements. The users of the financial statements depend on the accuracy so they can make important investment decisions. The SEC has an interest in the independence of the auditor because it directly affects stock prices and if an auditor is not complete and intentionally overlooks pertinent information that can cause a company to look like it is financially stable and stock prices go up and in reality the company is not stable and the stock prices are falsely inflated and can cause great turmoil and loss of money in the market, like what happened with ENRON.

Comment this post form JP

I found a survey that was recently conducted on adult Americans that had "at least $10,000 invested in the capital markets through retirement plans or direct holdings" ("Auditors," 2019). The study was to gain some insight on how much confidence the people had on audited financial information. It was interesting to me that they found that in the last year alone, the amount of confidence in financial information audited in the United States has grown and the financial information audited elsewhere has decreased. 81% of the people surveyed said that they had confidence in independent audit committees of public companies. 

I think that this is meaningful for the auditing community. Based on this, they could perform some extra research to see what they did different in 2019 from 2018. From this, they can know what to continue doing to gain users trust. Another thing that they could do is another survey to see why people don't fully trust them yet. That way they could see where they could get better.

After analyzing this article, my biggest concern is why is there such a lack of trust for financial information audited outside of the US? I feel that after all of the things that are being uncovered about the very president of the US, that people would have an overall general distrust, but it seems like the effects are the opposite. I could also be relating two completely unrelated events.