Question

A privately held audit client has retained the auditor who performs the annual audit of the client's financial statements to assist with the implementation of a new computer system. Which of the following services provided by the auditor most likely would impair independence under the AICPA Code of Professional Conduct?

A. Advising the client on qualifications of personnel hired operate the new system.
B. Performing a search for and hiring new personnel to operate the new computer system.
C. Counseling with the client on potential expansion of the business.
D. Training personnel in the operation of the new computer system.

Answer 1

The most likely service that would impair independence under the AICPA Code of Professional Conduct when assisting with the implementation of a new computer system for a privately held audit client is performing a search for and hiring new personnel.

Step-by-step explanation:

The auditor's independence might be impaired when providing certain non-audit services to their audit client, as outlined in the AICPA Code of Professional Conduct. In this case, the most likely service that would impair independence is performing a search for and hiring new personnel to operate the new computer system (option B). This directly involves the auditor in management's decision-making process, which can compromise their objectivity and independence. It is important for auditors to maintain independence to ensure the integrity and credibility of their audits.