'Is it possible for auditors to achieve absolute independence and what regulations should be imposed to attain or maintain independence?'
Auditor independence requires auditors to take an unbiased viewpoint in the overall performance of the audit report, and therefore maintain the fundamental principles of integrity and objectivity. Auditor independence is possible, however it is quite hard to achieve as it requires auditors to meet all the guidelines set out by AASB and statutory requirements.
(Bailey & Gramling) To achieve absolute auditor independence the auditor needs to be independent both in fact and in appearance in order for stakeholders to accept the auditor’s opinion on the financial reports of an organization (2004). (Bailey & Gramling) Actual independence, known as independence in fact, requires auditors to complete their work with complete honesty, integrity and objectivity, following all statutory requirements and guidelines set out by AASB regarding auditor conformance (2004). Auditors must also achieve independence in appearance, which comprises of the public view on your audit performance. This requires an auditor to eliminate factors that may present the view that you are influenced, have a relationship with or may have a biased opinion towards the company in which you audit. Justice Owen states that professional independence is a state of mind. He comments on the difficulty in determining a breach of actual independence, noting that it is impossible to enter an auditors mind and determine if there has been any breach regarding evidence collection procedures or inappropriate reporting. This places greater emphasis on the importance of achieving independence in fact and in appearance, for stakeholders to believe your opinion of organisations financial statements as a valid and honest view.
In order to maintain and regulate auditor independence, the black letter law and the principle based approach should be implemented. (Mauldin) The...
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