Data Trappers Inc.

Topics: Audit, Auditing, External auditor Pages: 1 (315 words) Published: April 17, 2011
Data Trappers, Inc.

When examining whether or not B&T should be permitted to serve as the independent auditor of Data Trappers, Inc. (DTI), we must first look at what it means to be an independent auditor. For an external auditor to be independent they need to be independent of the company they are auditing in both fact and appearance, meaning they have to look as if they aren’t connecting to a company in any way and they must also not actually be connected to a company in any way. As well the auditor should not have had any connections with that company for at least a period of two years.

Using these guidelines to evaluate whether or not B&T should be permitted to serve as the independent auditor of DTI it is somewhat apparent that B&T would not make a good independent auditor. B&T worked for Data Chips, a wholly owned subsidiary of DTI, in July and August of 20X8 providing bookkeeping services. In August of 20X9 DTI filed an 8-K with the SEC naming B&T as the successor auditor to Wilkers--this happened without the completion of new client acceptance procedures, signing of an engagement letter, or B&T actually beginning any actual audit procedures. Not only does this appear to be unprincipled, but it was done merely a year after B&T had been working for DTI.

Once B&T was actually appointed as the new auditor for DTI, they ceased all services to Data Chips and destroyed the results of their services. This makes it appear as if B&T had some knowledge about DTI that they wanted destroyed before they began their audit. Because of the accumulation of these things which may cause skepticism by third parties it would be best for B&T to not serve as an independent auditor for DTI.
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