Ethical Considerations Certified public accountants are expected to maintain independence from their audit clients. Any action that might cause the CPA to compromise his or her judgment at some future date must be avoided. In which of the following situations would the auditor be judged as unethical by failing to maintain an appropriate degree of independence?

a. The auditor and several members of management go out to lunch on the last day of the audit and the company pays for the lunch.

b. The company has an extra pair of tickets to the first game of the national basketball league playoffs and gives them to the partner in charge of the audit.

c. The partner in charge of a bank audit finances a $400,000 home mortgage with the bank and receives a substantially lower interest rate than other customers.

d. The partner in charge of the audit of a local gasoline station purchases a lot of gas at the station and frequently has cars serviced there.

e. The auditor discovers that the company published inaccurate financial statements for the prior year and the auditor had failed to find the error during the course of the audit. The company wishes to issue new securities, and disclosing the mistake may make it difficult to do so.
The auditor agrees with the company that it should ignore the error.

f. The auditor discovers that the company has taken questionable deductions in its tax returns for the prior year.
The auditor notifies the company of this and does nothing more.