>Independence in the context of auditing involves both independence of mind and independence in appearance.

>To maintain independence when auditing client’s financial statements, an auditor is required by the Code of Ethics for Professional Accountants to

1 identify threats to fundamental principles for professional accountants:

.Integrity: be straightforward and honest in all professional and business relationships.

.Objectivity: be free from bias, conflict of interest or undue influence of others that override professional or business judgements.

.Professional Competence and Due Care: to maintain professional knowledge and skill at the level required and act diligently, according to applicable technical and professional standards.

.Confidentiality: not disclose any confidential information acquired as a result of professional and business relationship to third parties without proper authority unless there is a legal or professional right or duty to disclose.

.Professional Behaviour: comply with relevant laws and regulations and avoid any action that discredits the profession.

2 evaluate the impact or significance of the threats identified:

.Self-interest: holding financial or other interests leading to bias in conducting the audit.

.Self-review: perform and re-evaluate the work by same person.

.Advocacy: promote a position to the extent that objectivity is impaired.

.Familiarity: too sympathetic due to close relationship with client.

.Intimidation: pressurised by others deter the auditor from acting objectively.

3 apply safeguards to minimise the threats to an acceptable level:

.Safeguards created by profession, legislation or regulation: for example, education and experience and examination requirements, continuing professional development, accounting and auditing standards, code of ethics, professional or regulatory monitoring, disciplinary actions.

.Safeguards in the work environment: for example, quality control policies and procedures, ethical leadership recruitment and training programmes, monitoring and disciplinary procedures, team member rotation, internal control and corporate governance.