Auditing & Assurance › Ethics & Independence
What safeguards can mitigate threats to independence?
IntermediateAnswer
Safeguards reduce threats to an acceptable level: those created by the profession/regulation (standards, monitoring, education, licensing) and those in the firm/engagement (rotation of partners, independent quality reviews (EQCR), separating teams, policies prohibiting certain services, consultation). If no safeguard can reduce a threat sufficiently, the auditor declines or withdraws.
Real-world example To counter a familiarity threat from a long tenure, the firm rotates the engagement partner and adds an independent review.