In the event of the auditor having a relation in the client company, the auditor‘s independence may be jeopardized due to potential influence from the relative.
• The director(s) may insist in being overly friendly. This may put the auditor in a difficult position since he may not be in a position to handle his independence professionally.
• The auditor could be having some business relationship with the client whose accounts are being audited. His independence here is likely to be compromised.
• In the provision of other services to the client e.g. accounting services, the auditor may be faced with the challenge of not knowing how far to go, without putting his independence at a risk.
• Threatened litigation. Should there be a pending court case lodged by the client, for instance against the auditor, the auditor will be at a disadvantaged position as far as his independence is concerned.