Week 4 - Threats to Independence Flashcards
(14 cards)
1
Q
What are the six threats to independence?
A
- management
- advocacy
- self-interest
- self-review
- intimidation
- familiarity
2
Q
What is the word to remember the threats to independence?
A
MASSIF
3
Q
M
A
Management
4
Q
A
A
Advocacy
5
Q
S (First)
A
Self-interest
6
Q
S (Second)
A
Self-review
7
Q
I
A
Intimidation
8
Q
F
A
Familiarity
9
Q
Management
A
- you are making management decisions for your client e.g asked to make the accounts
- management roles conducted by the auditor, such as implementation of IT systems
10
Q
Advocacy
A
- trading in client shares, which in turn promotes the client
- asked in AGM to talk about how good client is to shareholders
11
Q
Self-interest
A
Financial interest in client
12
Q
Self-review
A
Where the audit firm reviews the financial statements prepared by itself
13
Q
Intimidation
A
Threats to replace auditor
14
Q
Familiarity
A
Relationship with client staff, such as family member employed by client firm
