And also, I agree with the four generally, but I think there ought to be a fifth governing principle that would determine when an auditor is independent, and it should be a behavioral principle.
The literature is very clear
We ought to make a statement that when an auditor either has any relationship or engages in any activity that gives the appearance that independence may be impaired that that’s something that ought to be proscribed.
I’m talking about ethics programs that are the keystone of the Defense Industry Initiative and has been adopted by the overwhelming majority of large public corporations
If you say, “Well, how do we enforce that?” well, we do have an existing ethics rule forbidding acts discreditable to the profession. (more…)