Did friendship impair the auditor’s independence?

Abstract

The objective of this case is to help students identify potential violations of independence between a member of an external financial statement audit team and a client employee. Additionally, this case informs students of the audit firm's responsibilities to identify and address independence violations should they arise. The concept of independence is often difficult for students without any practice-oriented exposure to grasp. The case, loosely based on an actual auditor-client situation, presents a situation an audit professional might encounter in the ordinary course of business to bring the concept of independence to life. Instructors can use this case to enhance their lecture and discussion of auditor independence, either as a graded assignment or a guide for an in-depth class discussion.