Categories of Threats (2) Flashcards
What is a self-interest threat?
Risk that a financial or other interest in a client will inappropriately influence the professional accoutant’s judgement or behaviour
Example of self-interest threat?
Owning shares in an audit client
What is a self-review threat?
When a professional accountant from audit firm performs work for client and this work later reviewed by same person. To arrive at a judgement on the subject matter
What is an advocacy threat?
Risk that a professional accountant promotes a client’s position to the point that accountant’s objectivity is compromised
Example of an advocacy threat?
Acting as advocate on behalf of an assurance client in litigation or disputes, or promoting shares in a listed audit client
What is a familiarity threat?
Risk that due to a long relationship with a client, the professional accountant could be too sympathetic to their interests or too accepting of their work
An example of a familiarity threat?
Firm has audited the same client for several years they may not question information presented by client as closely as in initial years
What is an intimidation threat?
Risk that professional accountant is deterred from acting objectively because of actual/perceived pressures
An example of a intimidation threat?
Being pressured to reduce inappropriately the extent of work performed to reduce fees charged
