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Avoiding threats to independence
Providing other accounting services to audit clients raises many issues and risks. Lecturer John Selwood examines the need for extreme care and appropriate safeguards.
In my experience, the most common threats to independence that auditors experience arise from the provision of accounting services. I am not thinking here about the audits of Public Interest Entities (PIEs), listed entities and Other Entities of Public Interest (OEPIs), where the requirements are different. I am thinking about small companies, charities, LLPs and so on, and the thousands of larger private entities that lack the resources to prepare their own financial statements or maintain their own accounting records, and have no inclination to make their lives complicated by engaging with another firm of accountants – other than their auditor – to provide these services.
But providing non-audit services to audit clients raises all sorts of thorny questions for auditors, standard setters and regulators.