Audit Independence Mechanism

Audit Independence Mechanism

1.    Scope of Audit Engagement

Engagement partner would provide information about the scope and nature of audit to device overall strategy for independence.

2.    System of Notification

Firm should establish system or policies for communication of relationship and circumstances to the firm.

3.    Integration of Information

All independence related information should be integrated at appropriate level. Such information is used to take appropriate decisions or action for implementation of independence requirements.

4.    Promptly Notification of Breech

Firm should establish a system which should promptly notify the breeches to the appropriate authority i.e. engagement partner. Such notification may also be communicated to other relevant person within firm.

5.    Statement of Compliance

Firm should circulate a statement of compliance with independent requirement within firm at least once in a year.

6.    Safeguard for Familiarity Threat

Firms need to establish appropriate safeguard against familiarity threats in case of continence relationship with client. In case of listed company a rotation of engagement partner is an effective safeguard against familiarity threats.