Final answer:
Auditor independence is essential in audits of employee benefit plans, applying to the plan, businesses with the plan, the plan sponsor, and services providers like actuary firms, ensuring trusted audits and aligning with pension protection measures like contributions to the Pension Benefit Guarantee Corporation.
Step-by-step explanation:
The question at hand deals with the requirements for independence by the auditor in the context of audits of employee benefit plans.
Auditor independence is crucial to ensure the integrity of the audit, and it must extend not only to the plan itself but also to parties engaged in business with the plan, including investment companies. Independence is also necessary towards other entities involved with the plan, such as the plan sponsor and the actuary firm providing services for the plan.
This ensures that the audit results are trusted by stakeholders, including the plan members. This concept aligns with the broader protective measures such as pension insurance, where employers contribute to the Pension Benefit Guarantee Corporation.
This corporation role is to secure pension benefits for workers in the event an employer cannot pay the promised pensions due to bankruptcy.