An auditor must not only be independent in fact, but must also appear independent.

Required:

1. Explain the concept of "independence" as it applies to third-party reliance on management's assertions.

2.

a. What determines whether or not a practitioner is independent in fact?

b. What determines whether or not a practitioner appears to be independent?

3. Explain how a practitioner may be independent in fact but not appear to be independent.

4. Would a practitioner be considered independent for an audit of the financial statements of a

a. Church for which he or she is serving as treasurer without compensation?

Explain.

b. Civic club for which the auditor's spouse is serving as treasurer-bookkeeper and the practitioner does not receive a fee for the audit? Explain.