Can anyone explain this to me?
Answer:
If the auditor does not remain independent or is seen not to be independent then he can loose credibility, which is the purpose of the auditor i.e. to lend credibility to the Financial Statements.
If the auditor is not independent then he/she is more susceptible to the influence of the clients and may be more willing to overlook things in the Financial Statements. (e.g. errors, ommissions, in appropriate accounting treatments, etc.)
The auditor can be disciplined by the firm (e.g. worst case senerio- loose his job). He/she may also be disciplined by the body that regulates the profession in that country depending on the circumstances of the particular situation and the strictness of their rules and regulations for independence. (worst case senerio- loose his CPA deisgnation).
Generally it is vitally important for the auditor to maintain independence.
he might lose his job and his CPA certification..
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