Which of the following circumstances impairs an auditor's independence?An auditor's independence is considered impaired if the auditor has: a joint, closely held business investment with the client that is material to the auditor's net worth.
What can impair an auditor's independence?The commencement of litigation by the present management alleging deficiencies in audit work for the client would be considered to impair independence. The commencement of litigation by the covered member against the present management alleging management fraud or deceit would be considered to impair independence.
When can independent auditors maintain their independence?An auditor who is independent 'in fact' has the ability to make independent decisions even if there is a perceived lack of independence present, or if the auditor is placed in a compromising position by company directors.
What are auditor independence rules?To be independent, the auditor must be intellectually honest; to be recognized as independent, he must be free from any obligation to or interest in the client, its management, or its owners.
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