Online CPA Resources: Free and Paid Options
Are you looking for online CPA resources? You’ve come to the right place.ย There are plenty of online resources,…
Independence is foundational to attestation services provided by Certified Public Accountants (CPAs). After all, the CPA is opining on the fairness of financial statements or other deliverables. Without independence, then the comfort third parties receive from CPA opinions or reports is limited and, possibly, nonexistent.
Many audits or attest services are performed in order to provide comfort to third parties such as lenders. For example, if a bank loans a business $10 million, the bank wants assurances that the financial statements are fairly presented. That comfort can come in the form of an independent auditorโs opinion, though there are other options such as review engagements.
Auditors sometimes provide nonattest services such as preparing financial statements or preparing tax returns. The AICPA requires auditors to document the nonattest services provided along with support for why such services donโt impair the auditorโs independence. For instance, there is a self-review threat to independence when auditors create the financial statements that they are auditing. Consequently, the company being audited has to assign a person with sufficient skill, knowledge, and experience to oversee the nonattest service (in this case, the preparation of financial statements). That person has to review the prepared product (financial statements) and assume responsibility for them. Why? The auditor canโt make management decisions. If he or she does make management decisions, independence is impaired.
The AICPA has a Code of Conduct that provides independence interpretations that are specific to certain situations such as hosting services. It also provides for a conceptual framework that can be used when particular situations are not addressed in the Code. That framework calls for safeguards (responses) that can be used to ameliorate threats to independence. In the case of financial statement preparation, the audit firm might have a second person (not involved in the audit) review the financial statements.
Independence is to be considered for services such as audits, reviews, ย compilations, and agreed-upon-procedure engagements. In most cases (compilations excepted), the accountant is prohibited from providing the service if he or she or the firm is not independent.
Several different bodiesโincluding the AICPA, the SEC, the GAO, and the DOLโprovide independence rules. Each set of rules is to be applied when relevant. So multiple sets of rules can be applicable to one engagement.
Are you looking for online CPA resources? You’ve come to the right place.ย There are plenty of online resources,…
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