Independence Trait for Accoutant
Business and Management
Submitted By davidtbell88
This short paper will cover the trait of independence, and it will answer a few questions posed to look at the trait of independence from a few different angles. These angles include personal definitions of the trait and how a person should be able to demonstrate that trait. The paper will cover how the AICPA looks at Independence, how the State of Texas vies this trait, and a look at a current article showing the impacts of the trait independence. Upon the conclusion of this paper the reader will have a better understanding of how independence in accounting is defined and how to identify it As we see defined in our class text on page 162 is that independence is defined as, "the state of mind that permits the performance of an attest service without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and professional skepticism. To appear to be independent, the CPA should avoid circumstances that might cause an informed third party to reasonably conclude that the integrity, objectivity, or professional skepticism of a firm or member of the audit (attest) engagement team has been compromised." Within the frame work of my own personal definition I define independence as having the ability to have both the personal courage and institutional ability to analyze, state conclusions, and act in the best interests of the public. As pulled from http://www.tsbpa.state.tx.us/firms/alt-business-structure.html on 9/18/11 we see that the state of Texas that CPA's must maintain independence and perform their duties free of bias or pressure. The AICPA as pulled 9-11-11 from http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/et_100.aspx requires that a person must be both independent of mind and of appearance. In other words the CPA must be free of influence of others and the appearance of any influence from others in their duties. When looking for a current article discussing the good and bad of independent traits in a person I found this interesting article located at http://www.reuters.com/article/2011/09/18/us-ubs-trades-idUSTRE78H17X20110918?feedType=RSS&feedName=topNews as pulled 9-18-11. In the article it does not directly state that London trader Kweku Adoboli acted with independence, but it can be inferred that he did so in an unethical manner which has lead to a great deal of financial damage. $2 billion lost, damaged bank reputation, and jail time is the results of Mr. Adoboli acting a very unethical manner. His actions where devoid of accountability and of positive influences to prevent this outcome is why I say this is a display of independence in a negative manner. In conclusion we have seen one recent case of a person who acted independently in an unethical manner that lead to an outcome costing billions and damaged the reputation of the largest Swiss bank. We have looked at how several different viewpoints consider the trait of independence as the ability to make decisions, take actions, and conduct one's self in a manner free of influence from others as well as being free of the appearance of influence. It is now up to the reader to apply this trait in their own professional world.