What are generally thought to be the principal threats to auditor independence?

Introduction Auditor emancipation is one of the roughly important show ups in method of accounting practices today. Independence increases the effectiveness of take pipeline by providing assurance that the hearer will plan and extend the visit objectively. (Myring and Rloom, 2003, p31). The purpose of the hearer is to confirm the reliability of the statements produced by managers, and go behind the info to find surface the evidences. So, the liberty of the canvasor is critical to the repute of auditing. But, since the accountancy practices do make up in a rattling commercial world, the auditor would be mildewd by a widely range of nemesiss. According to Glynn, Perrin and white potato vine (1998), there are four briny threats to the auditors independence, namely, fee income, in the flesh(predicate) relationship, financial involvement, conflicting interests. The purpose of this try place is presently to identify John and Michaels point of view on these threats and represent their impact on auditors independence. The fee income The first threat is called fee income .This is the most common threat to auditor. It could conclude into two part: audit fees and fees for separate work. In the first place, audit fees (Glynn, Perrin and Murphy, 1998, p122), is paid by the company for carrying out the audit practice.

In theory, the main shareholders should decide the amount of the audit fee as well as the auditors but real it usually hand over the power to the directors. Thus, the influences from directors of the company give way out a great threat to the auditor. In audit, the managers role is just like an examinee, if he has too much influence on the examiner, the result will obviously not ! reliable. So, bound the auditors independence far away from the directors influences is a key issue to propose a reliable audit result. Except audit fees, the other important... If you involve to get a full essay, browse it on our website: OrderEssay.net

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