The auditor of Moab Ridge,Inc.and subsidiaries,a public company,performs a valuation analysis for the purpose of testing the goodwill for impairment.Moab Ridge did not have a valuation analysis performed previously and will use the auditors' valuation for internal purposes as well.The above situation best represents which of the following?
A)A violation of common law.
B)A prohibited service.
C)Scienter on behalf of the auditor.
D)Value added auditing for client retention.

Question

Quizplus · Accepted Answer

According to the AICPA's Code of Professional Conduct, performing a valuation analysis is a prohibited nonattest service for an auditor of a publicly traded company, because it creates a self-review threat to the independence and objectivity of the auditor. Therefore, the auditor's actions in this situation represent a prohibited service.

The Auditor of Moab Ridge,Inc