# Independence of Auditors
## Core Definition
Independence means that the judgment of the person is not subordinate to the wishes or direction of another person who might have engaged him.
## Two Dimensions of Independence
### 1. Independence of Mind
- State of mind that permits provision of an opinion without being affected by influences that compromise professional judgment
- Enables the auditor to act with integrity, exercise objectivity and professional skepticism
### 2. Independence in Appearance
- Avoidance of facts and circumstances that a reasonable and informed third party would conclude compromise the firm's or member's:
- Integrity
- Objectivity, OR
- Professional skepticism
## Why Both Matter
| Independence of Mind | Independence in Appearance |
|---|---|
| Internal — auditor's actual state | External — how it looks to others |
| Ensures objective opinion | Ensures public confidence in audit |
An auditor may be mentally independent but if facts suggest otherwise to a reasonable observer — public confidence is lost.
## The 'Reasonable Third Party' Test
When assessing independence in appearance, ask: What would a reasonable, informed third party conclude? This is an objective test, not the auditor's own subjective view.
## Practical Implications
- Holding shares in audit client → may not affect mind, but appears to compromise → fails appearance test
- Spouse working in client's finance function → familiarity may exist; appearance is compromised regardless of actual influence