AUD Independence Questions: What Services Can the CPA Actually Perform?
The question is not simply whether the CPA did something besides the audit. The issue is whether the service impairs independence under the applicable rules.
Identify the engagement first
Audit, review, compilation, preparation, attestation, tax, and consulting services do not all carry identical independence requirements. Classify the engagement before applying a rule.
Identify the applicable framework
Issuer, nonissuer, governmental, and other specialized environments can involve different independence standards. Do not apply one framework blindly.
Nonattest services
A CPA may sometimes perform permissible nonattest services for an attest client without automatically impairing independence, provided the client retains appropriate management responsibilities.
Management must manage
Management must accept responsibility, designate someone with suitable skill, knowledge, or experience to oversee the service, evaluate the results, and accept responsibility for them.
Management participation threat
Authorizing transactions, making policy decisions, taking custody of client assets, directing employees as management, or assuming management responsibility creates serious independence concerns.
The exam shortcut
Ask whether the CPA is assisting management or replacing management.
Related Summit guides
FAQ
Can an auditor ever provide bookkeeping help?
Some services may be permissible depending on the applicable rules and management responsibilities.
Can the CPA make management decisions?
Management participation is a major independence problem.
Do all CPA engagements require independence?
No. Identify the specific engagement and applicable professional standards.