International Finance and Accounting Handbook

15 • 36

Country

Concept of Independence

Functions Generally Not Allowed

Asia and the PacificAustralia

The auditor must be, and must be seen to be, independent

Investment by members of the practice and their relatives in

(i.e., free of any interest which is incompatible with

an audit client, either directly or via an intermediary, such as

objectivity).

a trust or nominee. Accepting, making, or guaranteeing a loanoutside the ordinary course of the client’s business; acting as areceiver or a liquidator of an audit client or as a director of acompany which exerts influence over an audit client; prepar-ing the books of a company, except in exceptional circum-stances; and under the Corporation Law, borrowing over$5,000, other than in housing loans made by the client in thenormal course of its business.

Japan

Concept of independence (fair and impartial attitude) set forth

An auditor or spouse cannot be independent if serving as an

in professional standards. An auditor should have no material

official of the corporation or responsible for financial affairs

conflict-of-interest relationship. Specific rules are set forth in

within one year of an auditing report; employed within one

CPA law and Ordinance of Ministry of Finance.

year of an auditing report; holding a material interest in thecorporation; connected closely, in present or past, with thecorporation through duties as a government official; providingcertain tax services.

Hong Kong

Appearance as well as fact of independence are required.

Serving as a director or an officer of the client company or as

Relationships to avoid are specified in the Companies

the partner or employee of an officer of the company, except

Ordinance and in the Rules of Professional Ethics issued by

when the company is private or a body corporate.

the Hong Kong Society of Accountants. It is not allowed tohave any financial interest in a client.

Korea (South)

“Financial independence” from audit clients is required; how-

Auditors are permitted to provide any and all kinds o

f services

ever, a CPA is permitted to have equity interest in the client up

within a limited range of accounting, auditing, and consulting

to

1

percent

. A CPA is not permitted to audit a client if he/she

services.

has been an employee within a year before initiative date ofaudit period