top of page

WHY DOES MY AUDITOR NEED TO BE INDEPENDENT?

Updated: Sep 10, 2021

The auditor’s role is very important in terms of providing credibility and assurance to a set of financial statements as well as protecting the public interest.


The person providing that opinion needs to very clearly have no vested interest in the organisation they are auditing. This allows the auditor the freedom to raise questions, qualifications or breaches, and bring issues to the board’s attention without fear. If the auditor has close ties to the entity, they may feel obliged or pressured to turn a blind eye or overlook certain matters that do not reflect favourably on the organisation or management.


The requirements of Independence are clearly highlighted in APES 110 which all auditors we are required to follow. This code links independence to two key parts:


(a) Independence of mind – the state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgement, thereby allowing an individual to act with integrity, and exercise objectivity and professional scepticism.


(b) Independence in appearance – the avoidance of facts and circumstances that are so significant that a reasonable and informed third party would be likely to conclude that a Firm’s, or an Audit Team member’s, integrity, objectivity or professional scepticism has been compromised.


Recent focus has been placed on the SMSF space to ensure the auditors are independent of the accounting firm preparing the financial statements.


If your organisation or SMSF, engage an auditor to make sure they have met the independence requirements so you can have confidence to rely on the audit report and the advice they provide.



Comments


CATEGORIES

TAGS

bottom of page