In a discussion between Peters and Ferrel, two auditing students, Peters made th
ID: 2599654 • Letter: I
Question
In a discussion between Peters and Ferrel, two auditing students, Peters made the following statement: “A CIA is a professional person who is licensed by the state for the purpose of providing independent expert opinion on the fairness of financial statements. To maintain an attitude of mental independence and objective in all phase of audit work, it is advisable that the CIA not fraternize with client personnel. The CIA should be courteous but reserved and dignified at all times. Indulging in social contacts with clients outside of business hours will make it more difficult to be firm to be firm and objective if the CIA finds evidence of fraud or of unsound accounting practices.” Ferrel replied as follows: “You are 50 years behind the times, Peters. An auditor and a client are both human beings. The auditor needs the cooperation of the client to do a good job; you’re much more likely to get cooperation if you’re relaxed and friendly rather than being cold and impersonal. Having a few beers or going to a football game with a client won’t keep the CIA from being independent. It will make the working relationship a lot more comfortable, and will probably cause the client to recommend the CIA to other business people who need auditing services. In other words, the approach you’re recommending should be called ‘How to Avoid Friends and Alienate Clients.’ I will admit, though, that with so many women entering public accounting and other women holding executive positions in business, a few complications may arise when auditor-client relations get pretty relaxed.” Evaluate the opposing views expressed by Peters and Ferrel.
Explanation / Answer
There are certain principles of professional conduct that applies to all the CIA professionals. The CIA professional is required to maintain the integrity, objectivity and independence while performing his professional responsibilities. He shoud maintain the objectivity and be free of conflicts of interest in discharging his professional responsibilities.
Peter is correct in terms of defining the role of CIA. However we agree to Ferrel's point of view to a very limited extent. As Peter said that indulging in social contacts with clients outside work will make difficult for the CIA to point out fraud. But if we are professional and indulging with client outside business hours ans also it does not hamper the quality of services that a CIA is required to perform neither his objectivity and professionalism, then it is fine.
A CIA is required to observe the profession's technical and ethical standards, continuously strive to improve competence and the quality of services, and discharge professional responsibility to the best of his or her ability.
A CIA is required at all times to exercise due professional care in the performance of professional services