Importance of independence of Auditor

The auditor must be materially independent of the client for the following reasons:


1. To increase credibility and to underpin confidence in the process. In an external audit, this will primarily be for the benefit of the shareholders and in an internal audit, it will often be for the audit committee that is, in turn, the recipient of the internal audit report.


2. To ensure the reliability of the audit report. Any evidence of lack of independence (or ‘capture’) has the potential to undermine all or part of the audit report thus rendering the exercise flawed.


3. To ensure the effectiveness of the investigation of the process being audited. An audit, by definition, is only effective as a means of interrogation if the parties are independent of each other.



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