Despite the absence of a legal relationship between the firm and the end user, the firm must consider the commercial substance of the transaction or relationship. This is particularly relevant for Public Interest Entities (PIEs) and Other Entities of Public Interest (OEPIs) due to the prohibition on the indirect provision of services. 

Transactions can be structured in many ways. To promote consistency among firms and audit regulators in the application of independence and other ethical considerations, the Audit and Assurance Faculty has published a guidance document highlighting key areas for firms to consider. 

For each potential threat to independence, an example is provided that describes a positive, neutral or negative situation. 

Positive factors suggest that it is unlikely that the firm may need to look to the end user when considering independence, while neutral and negative factors suggest that there may be such a need.

Although no weighting is applied, negative factors may be indicative of a threat to independence, which the firm is unlikely to be able to safeguard appropriately. 

Determining independence may not be straightforward and the matrix is not prescriptive, but it will assist members in assessing their circumstances to help ensure that relevant independence and other ethical considerations are taken into account.  

Read the guidance