The firm of McMaster and Martin, CPA, CA's is concerned that its client's current corporate culture may have an impact on the firm's independence. What kinds of safeguards can the
Client introduce or create to reduce the threat to independence?

Question

Quizplus · Accepted Answer

Introducing appropriate corporate governance mechanisms such as the establishment of an audit committee and ensuring that the responsibility for the appointment and removal of an auditor rests with independent directors on the audit committee or the board are both effective safeguards to reduce the threat to independence. By establishing an audit committee and having independent directors oversee the appointment and removal of the auditor, the client can ensure that there is a level of oversight and independence in the audit process, which can increase the reliability and credibility of the financial statements.

The Firm of McMaster and Martin, CPA, CA's Is Concerned