## Engagement Partner: Independence Compliance Conclusion
The engagement partner bears a personal responsibility to form a conclusion on whether the audit firm complies with all independence requirements applicable to the specific audit engagement.
### Three-Step Framework
Step 1 – Obtain Relevant Information
Collect information from the firm to identify and evaluate all circumstances and relationships that could create threats to independence (financial interests, personal relationships, non-audit services, etc.).
Step 2 – Evaluate Identified Breaches
Review any identified breaches of the firm's independence policies and procedures. Assess whether a specific breach creates an actual threat to independence for this engagement.
Step 3 – Take Appropriate Action
- Apply safeguards to eliminate threats or reduce them to an acceptable level (e.g., rotation of key team members, independent partner review, disclosure to those charged with governance).
- OR withdraw from the engagement where withdrawal is permitted by law or regulation, if safeguards cannot adequately address the threat.
Escalation Obligation: If the engagement partner cannot resolve an independence matter, the issue must be promptly reported to the firm for appropriate action. The partner cannot simply carry on with an unresolved threat.
### Types of Independence Threats (Context)
| Threat | Example |
|---|---|
| Self-interest | Financial interest in the client |
| Self-review | Auditing one's own prior work |
| Advocacy | Representing client in litigation |
| Familiarity | Long association with client management |
| Intimidation | Client threatening to replace auditor |