Final answer:
Independence in an audit context means that the auditor is unbiased and impartial, crucial for ensuring credible financial reports and maintaining public trust.
Step-by-step explanation:
When an auditor has a state of mind that is unbiased and impartial, it is referred to as independence in mental attitude or simply independence.
This concept is a cornerstone in the field of accounting and auditing. Independence is essential because it ensures that the auditor provides an objective evaluation of the financial statements of the entity being audited, free from any undue influence or conflict of interest. It fortifies the credibility of the financial reports.
Auditors must maintain independence not only in fact but also in appearance, which means that they should avoid situations that might appear to compromise their impartiality.
Independence in auditing refers to the state of mind of an auditor when they are unbiased and impartial in carrying out their duties. It is an essential quality for auditors to maintain professional skepticism and objectivity to ensure the integrity of their work. When an auditor is independent, they can objectively assess financial statements and provide an unbiased opinion on whether they are presented fairly and in accordance with relevant accounting standards.