Auditor Independence Case

Consider the following scenario:

You are the Independence Officer for your accounting firm (War Eagle, LLP). Individuals notify you when situations arise that they believe may impair the independence of the firm. You have received notifications from two individuals who have provided the following information:

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John: He is an audit partner in the Birmingham office. His wife owns shares of stock in Tiger, Inc. which are not material to their net worth. The Tiger, Inc. audit is performed out of the Birmingham office, but John is not the engagement partner and does not serve as a quality review partner.

Jane: She is tax manager in the Auburn office. She owns stock in Shug, Inc. through a mutual fund. The amount invested in Shug, Inc. is material to her net worth. The Shug, Inc. audit is performed out of the Birmingham office, and Jane does not provide any services to them.

Assigned task:

Please draft a FORMAL email to John and Jane. In the emails you should notify the individuals whether there is an independence issue based on the information provided. The emails should be PROFESSIONAL including the tone, grammar, and spelling. You should also be very thorough in explaining why there is/is not an independence issue (discuss each aspect considered in the decision) as well as what could change that (i.e. how could the independence issue be resolved or what could change that would result in an independence issue when one does not exist).

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