Is it permissible for an accountant to execute a contract to audit accounts with an organization if, at the outset, there is reasonable evidence to question whether the accountant can meet the independence criteria established by the GAO in the Yellow Book (Government Auditing Standards)?

No.  A contract to audit accounts should not be submitted to the Division of Municipal Audit if the auditor believes he will not be able to issue an opinion on the financial statements due to a lack of independence.   If a contract has already been executed and the auditor discovers that he will not meet the independence criteria established in Government Auditing Standards, the auditor should cease work immediately and notify both the client and the Division of Municipal Audit of the lack of independence, preferably in writing.  Personnel with the Division of Municipal Audit will provide additional guidance regarding the audit based on the relevant facts on a case-by-case basis.