American Institute of Certified Public Accountants (AICPA) Practice Exam

If an auditor lacks independence, can they still express an opinion on the financial statements?

1. Yes, as long as they follow GAAS.

2. No, independence is required to express an opinion.

3. Yes, but their opinion will be limited.

4. No, they must withdraw from the engagement.

The correct answer is: No, independence is required to express an opinion.

Independence is a fundamental principle in the auditing profession, essential for ensuring that an auditor performs their work without any bias or influence from outside parties. When an auditor expresses an opinion on financial statements, they must maintain an impartial stance to uphold the integrity of the audit process and to reassure stakeholders that the audit findings are trustworthy. If an auditor lacks independence, it compromises their ability to provide an unbiased opinion. This lack of independence could arise from various factors, such as financial interests in the client or familial relationships with client personnel, which could unduly influence judgment. As a result, expressing an opinion would undermine the credibility of both the audit and the financial statements themselves. In situations where independence is absent, the auditor cannot ethically or professionally express an opinion on the financial statements. This is why independence is not merely a guideline but a mandatory requirement for auditors. The clarity and reliability of financial reporting depend heavily on the auditor’s impartiality, making it critical for auditors to be independent in both fact and appearance to serve the public interest effectively.