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Question: Victoria Lilly is a practicing CPA. A long-time audit client has asked
Lilly to design and implement a computer-based accounting information system. The fees associated with this opportunity are very attractive. However, Victoria is concerned that she will not be able to maintain objectivity in future financial statement audits if she was responsible for the design and implementation of the client's accounting system. Furthermore, Victoria knows that professional standards require her to remain independent in "fact" and "appearance" from her auditing clients.
1. In regards to financial statement audits, what is the difference between independence in "fact" and independence in "appearance"?
2. Why do professional standards require that an auditor remain independent of their audit clients?
3. Do you believe that Victoria can accept the engagement to develop the client's accounting system and still remain independent? (Support your answer)
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