If independence threats from non-audit services are insufficiently mitigated, what should the audit firm do?

When considering the implications of insufficiently mitigated independence threats from non-audit services, it is paramount for an audit firm to prioritize maintaining its independence and the integrity of the audit process. Declining to provide non-audit services is a decisive action that helps preserve independence and avoid any perception of bias or conflict of interest that could arise from offering such services to the same client.

By opting not to offer non-audit services, the audit firm can eliminate any potential threats to independence that could compromise the objectivity of their audit work. This step not only reinforces stakeholder trust but also aligns with regulatory requirements and professional standards that dictate independence as a cornerstone of auditing.

While implementing additional safeguards or limiting the scope of services could be alternative strategies, they may not fully address the underlying independence threats presented by engaging in non-audit services. Consulting regulatory authorities for guidance can also provide valuable insights, but again, this does not fundamentally resolve the threat. The most effective approach to maintaining independence in this scenario is to avoid the conflict altogether by not offering those non-audit services.