| Course | ACC 645 Advanced Auditing |
|---|---|
| Module | Module 4 |
| Paper type | graduate discussion post on auditor independence and nonaudit services |
| Length | About 350 words, 3 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | MS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 645 Module 4
Module Four Discussion
Reading the Fee Table
The payroll company's latest proxy statement shows four categories of fees paid to its auditor: audit fees of $3.4 million for the integrated audit and quarterly reviews, audit-related fees of $900,000 for the SOC 1 and SOC 2 reports on its platforms, tax fees of $1.1 million for federal and state compliance and research credit studies, and no other fees. Nonaudit fees are about 59 percent of the audit fee if the SOC work is counted, and 32 percent if it is not.
The Sarbanes-Oxley Act and SEC rules prohibit specific services, including bookkeeping, financial information systems design, valuation, internal audit outsourcing, management functions and legal services, because they would have the auditor auditing its own work or acting as management. Tax compliance and research credit studies are permitted, but the audit committee must preapprove them, and the SEC and PCAOB bar tax shelters, contingent fees and tax services for executives in financial reporting roles (Arens et al., 2020). The SOC reports are audit-related because they use audit skills and procedures, and they arguably support the audit by testing controls the auditor also relies on.
Whether permitted services still impair independence is contested. Frankel et al. (2002) found that companies paying higher nonaudit fees were more likely to meet earnings benchmarks and had larger discretionary accruals, which suggests the fees bought leniency. DeFond et al. (2002) found no association between nonaudit fees and auditors' willingness to issue going concern opinions to distressed clients, which suggests firms protect their reputations. The two studies use different measures, earnings management versus a reporting decision, which may explain the difference.
My view is that this company's mix is defensible: the SOC work strengthens the audit, and the tax work is compliance rather than advocacy. The risk would grow if tax planning fees began to exceed the audit fee, because advocacy for the client and objectivity about its tax accounts sit uneasily together.
For classmates: should there be a hard cap on nonaudit fees as a percentage of the audit fee, as some countries have adopted, or is audit committee preapproval enough?
References
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2020). Auditing and assurance services (17th ed.). Pearson.
DeFond, M. L., Raghunandan, K., & Subramanyam, K. R. (2002). Do non-audit service fees impair auditor independence? Evidence from going concern audit opinions. Journal of Accounting Research, 40(4), 1247-1274. https://doi.org/10.1111/1475-679X.00088
Frankel, R. M., Johnson, M. F., & Nelson, K. K. (2002). The relation between auditors' fees for nonaudit services and earnings management. The Accounting Review, 77(s-1), 71-105. https://doi.org/10.2308/accr.2002.77.s-1.71
What the ACC 645 Module 4 instructions ask for
The Module Four discussion in ACC 645 usually asks about auditor independence: the conceptual framework of threats and safeguards, the SEC and PCAOB rules on prohibited nonaudit services, audit committee preapproval and fee disclosure, and whether nonaudit fees compromise independence. Three or four paragraphs supported by the rules and research, plus replies, is the usual length. Strong posts apply the rules to a specific company's fees, distinguish independence in fact from independence in appearance and engage with research that reaches different conclusions. A position supported by evidence on one side, while acknowledging the other, earns more credit than a neutral summary, and a real fee table gives the argument something to stand on.
How this ACC 645 Module 4 discussion example is built
The post reads the company's proxy fee table: audit fees of $3.4 million, audit-related fees of $900,000 for SOC 1 and SOC 2 reports and tax fees of $1.1 million for federal and state compliance and research credit studies, with no other fees. It explains that the SEC prohibits services such as bookkeeping, financial system design and certain tax work, that all permitted services require audit committee preapproval and that SOC reports are audit-related because they use audit skills. It contrasts Frankel, Johnson and Nelson's finding linking nonaudit fees to earnings management with DeFond, Raghunandan and Subramanyam's finding of no link to going concern opinions and asks classmates whether a hard cap on the ratio would work better than audit committee preapproval.
Where the ACC 645 Module 4 rubric puts the points
Scoring for the independence discussion typically weighs accuracy on the rules, application to a fee table or scenario, the distinction between independence in fact and appearance, engagement with research and replies. Graduate-level posts identify which services are prohibited and which are permitted with preapproval, explain why the classification matters, and weigh conflicting evidence rather than citing only one side. Posts that call all nonaudit services prohibited, or that ignore the audit committee's role, score lower. Replies that test a classmate's fee example against the rules or offer a different reading of the research earn more participation credit than general agreement. Exact citations to the SEC's independence rules add weight.
ACC 645 Module 4 help: the mistakes that cost points
Students sometimes assume nonaudit services are banned, when the Sarbanes-Oxley Act and SEC rules prohibit specific services and allow others, such as most tax compliance, with audit committee preapproval. Others treat the ratio of nonaudit to audit fees as the rule itself, when it is a common indicator rather than a legal limit. If your prompt asks about partner rotation or the cooling-off period instead, the same structure, the rule, its purpose and evidence on whether it works, applies. Classify each fee in your example as audit, audit-related, tax or other before arguing; the classification often answers half the question, and it shows the grader you read the rules rather than a summary of them.
Get ACC 645 Module 4 written to your instructions
Send the ACC 645 Module 4 prompt. The post will apply the independence rules to a concrete fee table, weigh the research on both sides and take a clear position for classmates to answer. Turnaround is two days, and the first is on us. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 645 Module 4 questions, answered
Where can I find a free ACC 645 Module 4 Discussion sample?
This page includes the full ACC 645 Module 4 post on nonaudit fees, preapproval and auditor independence.
Which nonaudit services are prohibited for public company auditors?
Services including bookkeeping, financial information systems design and implementation, appraisal and valuation, actuarial, internal audit outsourcing, management and human resources functions, broker or investment services, legal and expert services unrelated to the audit, and certain tax services.
Who must approve nonaudit services?
The audit committee must preapprove all audit and permitted nonaudit services provided by the company's auditor.
What is the difference between independence in fact and in appearance?
Independence in fact is the auditor's actual objectivity; independence in appearance is whether a reasonable investor would believe the auditor is objective.
Do nonaudit fees impair auditor independence?
Research is mixed: some studies link higher nonaudit fees to more earnings management, while others find no association with auditors' willingness to issue going concern opinions.