What are some of the current rules in relation to the independence of an auditor?

In 2018, Alice Weaver was a senior auditor working for a public accounting firm on the audit engagement of the Rack Floor. One of Alice’s friends asked her whether she thought that Rack Floor stock was a good investment. She said yes.

Her friend offered to purchase Rack Floor stock on her behalf. Alice provided $10,000 for the purchase placed under her friend’s name. She didn’t want her name associated with it because of independence concerns; an auditor is not allowed to own stock in a company that they audit.

Auditors that own stock in companies they audit as considered part-owners, and therefore not independent. This may infer with an unbiased audit because they may make decisions in the best interest of the client instead of external users. Even if they do conduct an unbiased audit, if they are stockholders, they may not be perceived as unbiased.

Alice continued working on the Rack Floor company account into 2020, and she failed to comply with the firm’s independence policies by lying on the yearly disclaimer. The public accounting firm launched an internal investigation into the matter based on an anonymous tip and terminated her employment. The PCAOB barred her from serving as an external auditor for a period of at least one year.

What are the unethical actions of the auditor, Alice Weaver?
Discuss what her decisions, in this case, cost her? Was it worth it?
What are some of the current rules in relation to the independence of an auditor?
In this case, compare independence in fact versus independence in appearance.
Do you think that Alice’s punishment was appropriate? Explain your answer.
Please type your assignment up in a Word document and follow APA format, according to the CSU Global Writing Center (Links to an external site.) (Links to an external site.). Include a title page and reference page. Use two (2) outside academic sources other than the textbook, course materials, or additional information providcozed as part of the course materials.

Last Completed Projects