Week 4 - Independence and Objectivity

Question 1

Objectivity

Answer 1

A state of mind that excludes bias, prejudice and compromise

Question 2

Independence

Answer 2

Relates to the circumstances surrounding a situation e.g financial, business and personal relationships - freedom from situations and relationships that make it probable that a reasonable and informed third party would conclude that objectivity is/could be impaired

Question 3

What is the first reason why independence/objectivity matters?

Answer 3

Users expect the audit to provide objective assurance (that directors can never provide on the financial statements)

Question 4

What is the second reason why independence/objectivity matters?

Answer 4

Public interest companies are public entities