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Auditor Independence: Case Study

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Auditor Independence
Auditors provide independent third-party opinion on the financial statements of a company. The independence of these auditors must be safeguarded during each engagement. The reliability and validity of an opinion rely on the independence of the auditor. There are times when the independence of the auditor is interfered with by malicious parties to safeguard with their own interests. Auditor independence can be referred to as the lack of hidden agendas and personal interests among parties that may affect the auditor’s objectivity (Thibodeau, Ramsay, Louwers, Sinason & Strawser, 2015).
Christians have always wondered whether God is interested in the world of work, whether whatever people do for their professions matter to …show more content…

When this arises, there are specific guidelines provided by the respective bodies and authorities for handling misunderstanding between the auditor and the client. Conflict situations tend to differ from one situation to another some of which might be caused by external influences making it difficult to negotiate between the involved parties. Amidst these conflicts, it is advised that the auditor terminates the contract of engagement entered with the client stating that the nature of their relationship is making it difficult for the auditor to provide a true and fair view of the financial statements (Emby & Davidson, 1998).
Besides conflict, other threats to independence are self-interest threat, self-review threat, advocacy threat, familiarity or trust threat and intimidation threat. Self-interest threats are mostly of financial nature where the auditor has a financial interest in the company that they are auditing and fear that providing bad opinion on the statements might hinder them from attaining this interest. Among the safeguards to these threats are; professional requirements, the legislation, and regulatory bodies and other third parties (Fearnley, Beattie & Brandt, …show more content…

(1998). The effects of engagement factors on auditor independence: Canadian evidence. Journal Of International Accounting, Auditing And Taxation, 7(2), 163-179. http://dx.doi.org/10.1016/s1061-9518(98)90012-x
Fearnley, S., Beattie, V., & Brandt, R. (2005). Auditor Independence and Audit Risk: A Reconceptualization. Journal Of International Accounting Research, 4(1), 39-71. http://dx.doi.org/10.2308/jiar.2005.4.1.39
IESBA. (2006). Code of Ethics for Professional Accountants December 2006 – London, UK.
Jones, A. (2002). A comprehensive audit case. Okemos, MI: Armond Dalton Publishers.
Thibodeau, J., Ramsay, R., Louwers, T., Sinason, D., & Strawser, J. (2015). Auditing & assurance services (6th ed.). New York, NY: McGraw-Hill.
Wright, C. (2010). Saints in the Marketplace: A Biblical Perspective on the World of Work - The Other Journal. The Other Journal. Retrieved 30 January 2018, from

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