Figure 1: Generally Accepted Government Auditing Standards Conceptual Framework for Independence

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1. Evaluate circumstances for threats to independence. Threat identified?
   1. No - Proceed.
   2. Yes - Go to step 2.
2. Is threat related to a nonaudit service?
   1. No - Evaluate threat for significance
      Is threat significant?
      1. No - go to 1a, Proceed.
      2. Yes - Identify and apply safeguard(s)
         1. Assess effectiveness of safeguard(s)
            Is threat eliminated or reduced to an acceptable level?
            1. No - go to step 3a Independence impairment. Do Not Proceed.
            2. Yes - Document nature of threat and any safeguards applied. Go to 1a, Proceed.
   2. Yes - Go to step 3.
3. Does the nonaudit service impair independence per Government Auditing Standards?
   1. Yes - Independence impairment. Do not proceed.
   2. No - Was the nonaudit service requested by audited entity management?
      1. No - go to step 2a, Evaluate threat for significance. Is the threat significant?
      2. Yes - Does management have suitable skills, knowledge and experience?
         1. No - go to step 3a Independence impairment. Do Not Proceed.
         2. Yes - Document consideration and document understanding with management or those charged with governance.
            1. Does the nonaudit service involve preparing accounting records and financial statements?
               1. No - go to step 2a, Evaluate threat for significance. Is the threat significant?
               2. Yes - See figure 2.