Analysis of Potential Threats to Independence And Objectivity

Running head: AUDITING
Auditing
Name of the Student:
Name of the University:
Author’s Note

AUDITING
1
Table of Contents
Question 1......................................................................................................................2
Introduction................................................................................................................2
Literature Review.......................................................................................................3
Analysis of Potential threats to independence and objectivity...................................4
Conclusion..................................................................................................................5
Question 2......................................................................................................................5
Part a...........................................................................................................................5
Part b..........................................................................................................................7
Part c...........................................................................................................................8
Reference........................................................................................................................8

AUDITING
2
Question 1
Introduction
The main purpose of the assessment is to critically analyse the objectives of audit of
the financial statement and also evaluate the extent to which an auditor is independent from
him client. The auditor has the responsibility of examining the financial statements of the
business and formulating an opinion that whether the same are show accurate picture or not.
This opinion is considered by the investors when they are analysing the company for making
investments. It is therefore important that the auditor provides an independent opinion
regarding the financial statements of the business (Ratzinger-Sakel, 2013). The assessment
would be looking into relevant auditing standards and also showing the extent of
independence which is available to an auditor. Furthermore, the analysis would also cites
examples of cases where auditors independence has been affected.
Literature Review
The process of auditing is an independent examination of the financial statement to
check if all relevant accounting standards are followed and whether the financial information
covered in the annual report are accurate or not. The audit of the books of accounts is a
mandatory process and all companies needs to undertake the same before publishing their
financial statements. The provisions of ISA 200 require an auditor to critically examine the
financial statements and while doing so the auditor needs to ensure that the ethical codes are
maintained (ISA 200 | ACCA Global. Accaglobal.com. 2020). One of the main principles
which need to be maintained is the principle of Independence. It is to be noted that principle
of independence is one of the fundamental principles which needs to be followed by the
auditor and effective steps should be taken by the auditor so that it does not come under the