If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services.

Question

Quizplus · Accepted Answer

Independence is one of the fundamental principles of assurance services. If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not have sufficient knowledge to take primary responsibility for the financial statements, then there is a significant threat to independence. This is because the PA may not be objective and may be seen to have a conflict of interest in providing assurance services to the same company. As a result, the PA cannot be considered independent for assurance services.

If a PA Performs the Bookkeeping and Makes Accounting Decisions