Page 340 - CA Inter Audit PARAM

CA Ravi Taori
➢ Specific circumstances give rise to unique threats to compliance with one or more of the
fundamental principles. Such unique threats obviously cannot be categorized. In either
professional or business relationships, a professional accountant in public practice should always
be on the alert for such circumstances and threats.

Threats to independence and the safeguards Old Course –
QNO-- available (N19R/M20M/N20E/M21M/M21R/N21R/M23R)
COA.35
Bhaskar CNO C1OC.180 New Course—(J25R)
The Chartered Accountant has a responsibility to remain independent by taking into account the context in
which they practice, the threats to independence and the safeguards available to eliminate the threats.
In the above context, explain the guiding principles.
Answer ➢ The Chartered Accountant has a responsibility to remain independent by taking into account the
context in which they practice, the threats to independence and the safeguards available to
eliminate the threats.
The following are the guiding principles in this regard: -

Importance of Independence
• In the case of audit, the key fundamental principles are integrity, objectivity and
professional skepticism, which necessarily require the auditor to be independent.
• For the public to have confidence in the quality of audit, it is essential that auditors
should always be and appears to be independent of the entities that they are
auditing.
Threats
• Before taking on any work, an auditor must conscientiously consider whether it
involves threats to his independence.
Options
• When such threats exist, the auditor should either desist from the task or put in place
safeguards that eliminate them.
• If the auditor is unable to fully implement credible and adequate safeguards, then
he must not accept the work.

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