Independence is one of the most vital aspects of an audit. It is always crucial to draw a clear line between the conflict of interest and the freedom of every profession, including auditing. Failure to do so mostly leads to misunderstandings between the various parties involved. In the case discussed here, many parties are involved. The first party is Craig Thorne as an individual auditor. Secondly, Allnet Company’s management that seeks his auditing services. The accounting firm that Thorne works for is an affected party as well. Finally, the stakeholders to whom the financial records are meant to reach are affected as well.
For an individual like Thorne, ethical behavior is influenced by various factors such as laws and regulations, beliefs and values, as well as the economic and social pressures. Ethics in auditing are essential because they stimulate openness and critical thought. They help in highlighting institutional and moral complexities of the firm under audit. In the case of Thorne and Allnet Company, the primary ethical factors highlighted include honesty, truthfulness, care, integrity, and loyalty.
As highlighted above, the case of Thorne and Allnet Company is the kind that puts professional ethics in jeopardy. The terms of raising the fee for the contract are typical. However, in as much as there is no indication of control or direct influence by the management of Allnet Company, I would advise Mr. Thorne not to agree to a contract with such remuneration terms.
The rationale behind the recommendation finds basis in Mr. Thorne’s ambition as well as the ethics that could be easily jeopardized by such open compensation terms. Mr. Thorne looks forward to becoming a partner in his current audit firm. However, agreeing to the terms of payment by Allnet Company’s management may see him overlooking ethical practices. Looking forward to making as much as he can, he may end up going against the moral expectations of integrity, honesty and truthfulness by forcefully indicating more profits for the firm. In so doing, his profession as an auditor could be at a hazardous stake.
Before you go, you are invited to support a noble cause on IndieGoGo: