Case 1The one of the goals of Audit and Assurance is to ensure the financial statements and internal controls are in compliance, free of frauds or material errors. Another goal would be maintain independent during the process. The two goals sometimes conflict with each other; auditors may not provide certain consulting services that damage the independent and objectivity of the auditor, even if it is for free. At the same time, the public demand financial reports that are free of material misstatements and least errors.Part AStrategy 1: It seems to be convenient and simple to sit down and help Susan on solving her accounting issue. It appears to do both Susan and I a favor: Susan will feel relieve as she would be consulted by the person that know her situation well; I will feel relieve too as I both could earn some extra income and avoid dealing with some potential compliance issues while auditing NYH in the future. Helping Susan also appears to consolidate the business relationship between “me” and her.However, it is against the principles of auditing. Auditors should not interfere with the accounting work that they are going to audit. Even if it is looks as harmless as helping with the compliance. Helping Susan would negates my independent status.Auditing something the auditor helps to create would invalidate the auditing work, which would diminish the significant of auditing and assurance. More importantly, auditors are not only expected to make sure financial statements are free of material errors, but also expected that the auditing work is performed independently. Helping Susan would lead to unable to fulfill the auditing expectation.Finally, it is illegal for a firm to provide both accounting consulting and auditing services to another firm at the same period of time. By doing strategy 1, I have violated the Sarbanes-Oxley Act, Section 201, even if I did it for free.
Strategy 2: Strategy 2 seems to be smart which keep me out of any potential risk of incompliance with PCAOB requirement or unwanted liability by simply refusing to help. Strictly adhere to the auditing rules would show auditor’s objectivity and independency, two characters the essential to auditing works.However, it sounds rude to the customers as Susan and the MTH Company may not able to fulfilling the compliance requirements. Refusing to help sounds unsympathetic to the customer. Moreover, if she is working inefficiently and unable to do well in her accounting works, it might eventually become auditors’ problems as auditors have to spend extra time asking Susan for more documents and auditing inefficiently, which cost more. In the worst case, auditors might issue a qualified opinion on the financial statement, damaging the relationship between MTH and the audit firm, result in termination of the business relationship. It might be better to help Susan now than wait for the situation to deteriorate.Part BWhile neither strategies mentioned above are very good in some aspects, finding a way both to help Susan and keep the objectivity and independency intact would be the best solution.Per PCAOB requirement, auditors may not directly help clients on the auditing work, as long as auditors could appear as independent and independent in fact, disclose the interactions with Susan, I may be able to help Susan. Thus, while I shall not provide accounting advice to Susan, I could still help Susan to some extent while fulfilling the expectations of audit works.