Accounting Business Reporting for Decision Making

CHAPTER 2 Accounting in society 71

DECISION Independence is a key attribute of auditing services. Not only do you have to be

independent in fact, but independent in appearance. Taking on the consultancy may impair your

independence. It would result in you auditing a system you helped to install. The engagement may

also impair your integrity and objectivity in the eyes of the investors and members of the childcare

centre that you are auditing. An audit is an independent check on behalf of those investors and

members. This could also lead to a breach of professional behaviour as it may not be seen to enhance

the reputation of the profession. A choice would need to be made between continuing as auditor and

taking on the consultancy engagement. Prior to accepting the consultancy engagement you would

need to ensure that you comply with the principle of competence and due care. You should not take

on the engagement if you do not have the expertise in the area.

REALITY CHECK

Independence versus financial planning commissions

The use of personal financial planning has significantly grown in the past ten years. Everyone is

encouraged to think about their financial future, including how they are going to fund their retirement.

This has resulted in many people making use of the services of financial planners or advisers. However,

the global financial crisis resulted in many investors losing a lot of money. Many of these investors are

now questioning the advice received from these financial experts.

Everyone is encouraged to think about their financial future.

One of the major criticisms of the financial planning industry is that financial planners are paid via

commissions from the manufacturers (of investment products) rather than from direct fees for services

rendered to clients. (Comparisons to doctors receiving commissions from pharmaceutical companies