The issue of whether the performance of non-attest (consulting) services for
audit clients impair independence of the auditors has been widely debated within the public accounting profession.
Arguments for restricting non-attest services to audit clients
1.) Self-review. It is impossible for the auditors to objectively evaluate their own non-attest work in an audit engagement. 2.) threat to independence. The additional fees derived from non-attest services serves as an additional. 3.) the existence of both the independence of mind and appearance is necessary. 4.) Engagements that might impair integrity and objectivity should not be accepted.
Arguments against restricting non-attest services for audit clients
1.) For so long a time, auditors have been providing non-attest services for audit clients in an objective manner. 2.) The performance of an audit is actually enhanced by the additional knowledge of the client obtained from performing non-attest services. 3.) Auditors can still perform audit engagement in an objective manner as long as the client establishes effective oversight over the performance of the non-attest services.
Opinion on the restriction of the
(consulting) services for audit clients
performance
of
non-attest
We are for restricting non-attest services for audit clients.
We believe that restricting non-attest services for audit clients is best. Doing non-attest services with audit clients is a violation with the provisions of the Code of Ethics for Professional Accountants in the Philippines.
Adherence to the Code of Ethics require the demonstration of integrity,
objectivity, and independence of the auditor in every service that he engages himself to. The objectification with the Code of Ethics can be evident under the following circumstances when engaging non-attest services of audit clients: 1. Self-review auditors may have to review the outcome of their own consulting it is impossible for the auditors to objectively evaluate their own nonattest work for example, where audit firms have been responsible for advice on or the actual installation of financial and other systems then subsequently found out in their audit some evidences that they are malfunctioning, they will be reluctant to report these findings to client management 2. Fees The additional fees derived from non-attest services serves as an additional threat to independence. These may give rise to a selfinterest threat to objectivity the loss of an audit client is also likely to lead to the loss of nonassurance engagement services which are perceived to be more profitable than audit engagements. Restricting non-attest services would mean that bigger clients would actually create a proportionately bigger intimidation threat because they would form a larger part of the firm's income. a consultant who had developed an accounting system for a client, and then an auditor afterward is engaged in forming an opinion about the set of financial statements is likely to be more mindful of the overall fee income which the client represents to the firm 3. Independence of mind and independence in appearance must both exist. A state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism. On the other hand, independence in appearance refers to the publics perception of the professional accountants independence. It is the avoidance of facts and circumstances that are so significant that a reasonable and informed third person would reasonably conclude that the firms integrity, objectivity and professional skepticism had been compromised The Code of Ethics does not only require the professional accountants to maintain independence in mental attitude, but professional
accountants should also avoid circumstances which would cause the
public to doubt their independence. Auditors may allow inappropriate accounting treatments because their independence has been compromised, either because they have become too close to the company they are auditing or the "familiarity" threat or, more directly, because their objectivity is challenged by overreliance on income from a single source.
"The More You Sweat in Practice, The Less You Bleed in Battle" - Richard Saavedra The More You Review The More Those Sleepless Night The More You Become Successful in The Future