Reference no: EM132668119

Question 1) In this course, we have been reviewing audited financial reports. If the auditor's fee is paid from the entity being audited, isn't there a conflict of interests that may lead to a lack of objectivity? Do you believe that a CPA can be truly independent when their payment of fees is dependent on the client?

Even though the auditor is being paid by the entity he/she is auditing, I believe that the auditor can still be truly independent. My reasoning revolves around the fact that the auditor does not necessarily decide what to do with the information that is uncovered. More specifically, the auditors are not expected to have any responsibilities related to operations. An auditor can't necessarily affect the operations of business so theoretically there shouldn't be an issue with an internal auditor being able to do their job appropriately. The information that the auditor uncovers is meant to benefit the company, so unless the authority the auditor reports to is involved in some kind of fraud, it shouldn't matter who is paying the auditor. Another thing to consider is that CPA requirements are pretty extensive. The exam itself is difficult and requires a large amount of dedication, time and energy to pass. Depending on the state there are age, residency and extensive education requirements involved to attain and hold a license, so it just seems crazy to me that someone would jeopardize that by not performing their job properly (Becker, 2020).