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Independence and the Provision of Other Non-Assurance Services - Case Study Example

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This paper "Independence and the Provision of Other Non-Assurance Services" discusses the auditing services grows. The problem is that due to the nature of other services, auditors that engage in their provision become extremely vulnerable to the risks of losing their independence…
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Independence and the Provision of Other Non-Assurance Services
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Download file to see previous pages Given the overall importance of auditor independence for the quality of audit and non-audit services, and taking into account the growing role of non-audit services in business, it is essential that businesses realize the impact, which their policies may produce on auditor independence and that authorities shift the balance of their professional priorities toward promoting and preserving auditor independence in assurance and other services.

In the current state of the auditing profession, the meaning of auditor independence is gaining additional importance. Under the influence of the recent business and auditing trends, auditor independence stands out as the critical measure of the auditor’s quality and professionalism. Auditor independence is generally defined as “a characteristic of the virtue of a good practitioner, who must be independent of any interest that might affect his/ her judgment” (Anandarajan, Kleinman & Palmon 2008). Auditor independence is considered fundamental to the general reliability of auditors’ services and reports; be it not independence, auditors would have failed to ever earn trust and confidence of their clients (POB Audit Panel 2007). Auditor independence is necessary and important for the provision of auditing to the extent, which makes these services and their results objective, unbiased, and non-related to the interests of either of the parties that participate in the auditing process. Throughout the history of the accounting and auditing profession, independence has always been its foundation and the source of its strength and stature (POB Audit Panel 2007). Independence in auditing also matters of one’s character and the state of mind (POB Audit Panel 2007). However, the meaning and significance of auditor independence become particularly urgent, when it comes to the provision of other assurance services.

The problem is that non-audit services place additional responsibilities and create new challenges, which auditors have to face in order to remain independent. According to Duh, Lee, and Hua (2009), auditors in non-audit services usually face the two critical incentives: “gaining service fees and avoiding litigation and reputation loss”. ...Download file to see next pagesRead More
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