Threats Arising from Financial Matters

Question 1

What are financial matters?

Answer 1

Financial interests
Gifts and hospitality
Fees
Loans and guarantees

Question 2

What threat might financial interests create?

Answer 2

A self interest threat

Question 3

Examples of this financial interest threat?

Answer 3

Ownership of shares in a client by firm/audit team member

Question 4

Where does self-interest threat arise in financial interests?

Answer 4

Firm/audit member would benefit personally if financial statements exceed market expectations

Question 5

Safeguards against financial matters threat (Disposal)

Answer 5

Disposal of shares

Question 6

Safeguards against financial matters threat (Individual)

Answer 6

Remove individual from audit team

Question 7

Safeguards against financial matters threat (Audit)

Answer 7

Inform audit committee

Question 8

Safeguards against financial matters threat (Review)

Answer 8

Review by an appropriate reviewer (e.g. an independent partner)