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To be recognized as independent, an auditor must be free from any obligation to or interest in the client. Independence is a fundamental concept in auditing, as it ensures that the auditor can objectively assess the financial statements without any influences or biases. If an auditor has a financial interest in the client or a significant obligation to the client, it could lead to conflicts of interest and undermine the integrity of the audit process. This independence allows the auditor to provide an unbiased opinion on the financial health of the client, which is essential for maintaining trust with stakeholders and the public.

In contrast, while friendships with the client's management and engagements in consulting services could impair an auditor's independence, what is paramount is the absence of any direct obligations or financial interests that may impact the auditor's objectivity. The accounting standards board's obligations pertain more to regulatory compliance rather than the independence of the auditor. Therefore, the most critical factor for maintaining auditor independence is the lack of any obligation to or interest in the client.