Week 15 - Why do Independence and Objectivity Matter?

Question 1

What is the first reason independence and objectivity matter so much?

Answer 1

Because of the expectations of those directly affected, particularly the members of the company. The audit should be able to provide objective assurance that the directors can never provide on the financial statements

Question 2

What is the second reason independence and objectivity matter so much?

Answer 2

The public interest. Companies are public entities, governed by rules requiring the disclosure of information

Question 3

What can the auditor do to preserve objectivity?

Answer 3

Withdraw from any engagement where there is the slightest threat to objectivity

Question 4

What are the disadvantages of an auditor withdrawing from an engagement?

Answer 4

• client may lose auditor who knows their business
• denies client freedom to be advised by accountant of their choice