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#68905 - 03/21/03 03:19 PM Auditor Independence
Mickey Offline
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Mickey
Joined: Aug 2002
Posts: 167
FL
We currently have our Public Accounting Auditors doing our EDP audit as well as the financial statement audit. With the new Sarbanes-Oxley Act and independence does anyone have any light to shed on whether they still can continue to do both? Our auditors say they can still do it for us and remain independent....I'm not 100% convinced. With the new joint release "Policy Statement on Internal Auditing" that was issued and reading it, it is looking like to me that they may not be able to do the EDP audit and remain independent?
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Audit
#68906 - 03/21/03 03:56 PM Re: Auditor Independence
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Are you an organization covered under Sarbanes-Oxley? If so, it prohibits them from providing the following non-audit services:

Bookkeeping or other services related to the accounting records or financial statements of the audit client;

Financial information systems design and implementation;

Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

Actuarial services;

Internal audit outsourcing services; (I would say the EDP audit service fall here)

Management functions or human resources;

Broker or dealer, investment adviser, or investment banking services; and

Legal services and expert services unrelated to the audit.

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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#68907 - 03/21/03 04:45 PM Re: Auditor Independence
Mickey Offline
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Mickey
Joined: Aug 2002
Posts: 167
FL
We do fall under this act and the exact reasons you listed are those listed in the policy statement and that is why I question their independence. I agree that EDP would be internal audit outsourcing but they say it isn't. The auditors say that they would include this audit in their normal auditing of the financial statements anyway.

I was just wondering if anyone had heard anything from their examiners.
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#68908 - 03/21/03 04:46 PM Re: Auditor Independence
Michelle D Offline
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Michelle D
Joined: Oct 2001
Posts: 313
Terminator Country
Based on my reading of the new interagency statement, even if you are not covered by Sarbanes-Oxley, but are covered by FDICIA, you cannot use the same firm for both services.

The partner of the firm should know this and not be pushing for continuing the IT engagement.
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#68909 - 03/21/03 04:48 PM Re: Auditor Independence
Anonymous
Unregistered

We just went through a competitive bidding process for the external auditors. Our external firm disqualified themselves from the EDP audit citing potential conflicts with Sarbox. Be very careful in contrcting for DP auditing with your exisiting firm. Good Luck!!

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#68910 - 03/21/03 04:55 PM Re: Auditor Independence
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Michelle brings up a good point, the FDICIA requirements do pull in specific SEC regulations and the auditor independance requirements is one of them. I would not want to push the line on a EDP audit by my external financial auditors that performs my attestation services.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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