i) Advantages of independent audit:

• Independent audits inspire trust by showing transparency and accountability in financial reporting, which enhances the credibility of financial statements.
• They help management detect and prevent errors and fraud, improving the reliability of financial information used by stakeholders.

ii) Independence in fact refers to the auditor’s state of mind, which allows them to provide an objective opinion without any undue influence. Independence in appearance refers to how third parties perceive the auditor’s behavior, which must be free from any situation that could compromise objectivity in the eyes of others.

iii) Inherent limitations of audit include:

• Auditors cannot guarantee that all errors or fraud will be detected, as audits only provide reasonable assurance and not absolute certainty.
• Judgements made in auditing may be subject to human error or misinterpretation.
• Audits rely on evidence, which is persuasive rather than conclusive.
• Internal controls, no matter how well designed, may not prevent all fraud or errors, especially if management overrides controls or colludes with others.