Ethics in Accounting: A Decision-Making Approach

Chapter 10Independence and Moral Seduction

AM I ETHICAL?

While performing audit fieldwork at Biggold Bank, you were approached by a bank executive to “leave your career behind” as an external auditor to become a Biggold Bank loan officer. Intrigued by this proposition, you nodded your head in agreement when this executive asked that your preliminary employment discussions remain confidential.

In your sincere professional judgment, the prospect of accepting employment with Biggold Bank does not affect your ability to diligently perform your current audit responsibilities. Should you make disclosures to anyone on your audit engagement team?

1. Yes, because you will consciously or unconsciously try to ingratiate yourself with the client
2. Yes, because others might reasonably doubt your ability to perform audit duties with complete objectivity
3. No, because you expressly promised to keep the conversation confidential
4. No, because your conversations thus far with this bank executive lack specificity and are merely preliminary inquiries

The SOLUTION is revealed at the end of the chapter.

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1. Identify the situations in which independence is required.
2. Understand how independence is achieved.
3. Explain and illustrate each of the seven threats to independence.
4. Understand how moral seduction and other behavioral influences affect auditor independence.
5. Identify safeguards that blunt threats to independence.
6. Understand ...