Independence is considered the cornerstone of the accouting profession. In relation to the audit the auditor should be independent in both fact and in appearance. Generally accepted auditing standards (GAAS) prohibits an auditor from issuing a report if they are not independent. This can lead to an interesting situaition if a member of the audit team loses independence shortly before the report is issued, even if it is through no fault of his/her own, (i.e,. a family member becomes employed by a client). Do you think that the rules regarding independence are too strict? Should they be more fair? Should the audit firm be punished if an auditor assigned to the audit is not independent?
Let's go a step further on independence. The Sarbanes Oxley Act prohibits the same CPA firm from providing both consulting and audit services to a client. Some argued, and continue to argue, that auditors can never be independent as long as they receive a fee from the audit client. Do you agree or disagree? Why? How would you suggest this issue be resolved?