Independence in Appearance vs$.$ Independence in Fact:

Independence in appearance and independence in fact are two fundamental concepts in auditing that ensure auditors maintain objectivity and impartiality in their work.

Independence in Appearance: This refers to the perception of independence by external parties, such as stakeholders, investors, and the public. It is essential for auditors to appear independent to maintain trust and confidence in their audit opinions. Even if auditors are unbiased in reality, any appearance of bias or conflict of interest can undermine the credibility of their work and cast doubt on the integrity of the audit process.

Independence in Fact: This pertains to the actual independence of auditors, irrespective of any perceived biases or conflicts of interest. Auditors must maintain independence in fact by avoiding any financial, personal, or professional relationships that could impair their objectivity. Independence in fact ensures that auditors can objectively evaluate financial information, exercise professional skepticism, and provide unbiased audit opinions without being influenced by external factors.

Objective Question:

Which concept of independence ensures that auditors maintain credibility and trust in their audit opinions?

a$)$ Independence in fact

b$)$ Independence in appearance

c$)$ Independence in action

d$)$ Independence in ethics