familiarity with or trust in the auditee. Self-review threat occurs when any product or judgement of a previous assurance engagement or non-assurance engagement needs to be re-evaluated in reaching conclusions on the assurance engagement or when a member of the assurance team was previously a director or Before an audit engagement, it is crucial that each member of the audit team review the five threats to independence. Self Interest Threat to Auditor and related Safeguards Mar 14, 2023 · topic 2 Auditing @NAISHAACADEMY #school #college #academics #university #audit #auditing #collegelife #campus #studies What are the Safeguards against Advocacy Threat? Like most other threats, auditors can avoid advocacy threats by employing some safeguards. 149H, key audit partners whose continuity is especially important to audit quality may, in rare cases due to unforeseen circumstances outside the firm’s control, and with the concurrence of those charged with governance, be permitted to serve an additional year as a key audit partner as long as the threat to Where such threats exist, the auditor must put in place safeguards that eliminate them or reduce them to clearly insignificant levels. This relationship created a familiarity threat, resulting in biased judgments and compromised independence. Significance of threats needs to be evaluated and if threats are other then clearly insignificant, safeguards need to be applied to reduce the threats to an acceptable level. Specific Safeguards For Familiarity Threat. Apart from their basic services, audit firms frequently offer other services. ISA 330 states that increased supervision is an appropriate overall response, and the APB bulletin says the audit engagement partner should consider being involved in the audit. There is a requirement for the audit engagement partner and Engagement Quality Control Review partner to rotate off after serving seven years as a key audit partner and observe a two year time-out period. Proposed AICPA Codification Project o Familiarity threat o Undue influence threat Jul 8, 2024 · The subordination of judgment threat is at an acceptable level when _____. , quality controls). Dec 1, 2023 · This threat may arise when total fees received from an attest client (both from attest and nonattest services) are significant to the firm as a whole, or the firm receives a large proportion of non-audit fees relative to the audit fee, or even if a significant portion of an auditor’s compensation is based on revenue generated from their audit Jan 31, 2023 · This type of rotation also helps eradicate threats like familiarity and self-interest threats. - Intimidation threats — threats that arise from auditors being, or believing that they are being, Identify the ethical threat; Evaluate and understand how it arises and the implication of the threat; Apply the knowledge to the specific scenario to determine the safeguards or course of action required. Annual Audit. As the engagement partner has promptly notified the firm about the interest of his Despite paragraphs 290. g. , 2017). Jul 25, 2015 · The researcher found that threats (Self-interest threats, Self-review threats, Advocacy threats, Familiarity or intimacy threats, and Intimidation threats) affect the auditor's independence of Of course, under some circumstances, the correct position would be to decline the tax consulting assignment. References. Another risk auditors face is s direct client threats. Management participation threats are defined as: 3:30 f. that you may find helpful include the following: Step 1: Identify threats. A. Although an understanding of an audit client and its environment is fundamental to audit quality, a familiarity threat may be created as a result of an individual’s long association as a member of the audit team with: The audit client and its operations; Jun 28, 2008 · The article concludes that there is the potential for the ‘Familiarity Threat’ to be present in both private and independent public limited companies, but its influence may be exaggerated particularly in respect of non-audit work. When the professional accountant determines that appropriate safeguards are not available or cannot be applied to eliminate the threats or Jan 2, 2021 · The finding of the review indicates that the most mentioned threats to auditor independence are non-audit services, audit tenure, auditor-client relationship and client importance. Management participation threat The safeguards required if a audit organization is structurally located within a Familiarity Threat B. For example, a familiarity threat may arise when an auditor has a particularly close or long-standing personal or professional relationship with an auditee. The model for standard setters is based on three key steps: Identify threats to the auditor’s independence and analyze their significance. Mr. Familiarity Threat: This is another example of a threat to auditor independence caused by a personal relationship with the client. D. If the same audit team and partners render their services to a client for a long time, it will create familiarity and the auditors will become sympathetic towards the client which will Aug 30, 2022 · Deploying policies and training staff on the importance of objectivity and independence will reduce exposure to threats (Latif et al. Nov 10, 2013 · Auditing is under this and I am going to share to you what are the threats to compliance with fundamental principles when doing an audit. Our regulators often define these risk as “threats”, and provide the related mitigating responses (or “safeguards”). If the same audit team and partners render their services to a client for a long time, it will create familiarity and the auditors will become sympathetic towards the client which will affect the objectivity. Identify threats to independence 2. Advocacy threat – the threat that a professional accountant will promote a client’s or employing organization’s position to the point that the accountant’s objectivity is compromised; Familiarity threat – the threat that due to a long or close relationship with a client, or employing Identify category of threat involved in each independent situation as Familiarity threat, Advocacy or Intimidation Threat. This could arise, for example, from a direct or indirect We would like to show you a description here but the site won’t allow us. If a threat exists, the member should determine whether the threat can be mitigated by any safeguards applied (e. Audit Framework And Regulation - Safeguards - Notes 6 / 8 The code addresses the familiarity threat for Public Interest Entity (PIE) audits through partner rotation. Policies that identify excessive reliance 4. Syllabus A. the CPA agrees to maintain confidentiality about the matter C. Auditor’s independence refers to an independent working style of the auditor being unbiased, unfettered, uninfluenced, and being fully objective in performing audit responsibilities. Step 2: Evaluate significance of threat. Familiarity threat 5. 33). (e) Self-interest threat; familiarity threat; intimidation threat As per APES 110. Threat that auditor will promote a client's or employer's position to the point that the auditor's objectivity is compromised. Sometimes, these threats may come from actual pressures, but other times they may be perceived. 12) APES 110 specifies a series of threats to ethical conduct: Self-interest; Self-review; Advocacy; Familiarity; Intimidation; Self-interest THREATS SAFEGUARDS Familiarity threat. Their independence and adherence to objectivity ensure success in auditing efficiently and effectively. Step 3: Identify and The threats and safeguards approach recognizes five potential threats to auditor independence: self-interest, self-review, advocacy for clients, intimidation by clients, and trust or familiarity We would like to show you a description here but the site won’t allow us. Fraud detection. On top of that, segregating audit team members is also critical in avoiding these matters. It is a threat that auditors face known as intimidation threat. C. com are following. On top of that, if the threat endangers the audit firm, it is best to discuss it with those charged with the A close business relationship between a firm or a member of the asst,Jrance team and the assurance client or its manage- 146 CPA EXAMINATION REVIEWER: AUDITING THEORY ment, ·or between the firm, a network firm and financial statement audit client may create A. Ethical threats apply to accountants - whether in practice or business. Proper use of government information. Self-review 3. The familiarity threat Familiarity threats occur when, because of a close relationship, members become too sympathetic to the interests of others. Familiarity Threats Jan 6, 2015 · Evaluate the significance of that threat; Consider safeguards you can put in place to address the threat. Jun 4, 2024 · 3. Self-review and familiarity threats individual is involved in an audit engagement over a long period of time. the CPA concludes the Jun 8, 2012 · We would like to show you a description here but the site won’t allow us. Threats: It has created self interest (Self Interest Threat to Auditor and related Safeguards) familiarity (Familiarity Threat to auditor and related Safeguards) and intimidation threats. For example such situations arise when client is close friend, relative or family member of the auditor. Jun 6, 2017 · In a conceptual framework, members have to use their professional judgement to determine and apply appropriate safeguards when they identify threats to the fundamental principles. This applies to the audit manager also. He has joined FTML as their Manager Finance, prior to the commencement of the current Jul 14, 2021 · ACCA职业道德准则要求ACCA会员都应该保持独立性，当发现自己的利益和客户的利益存在冲突时，不应该为这些存在利益关联或者利益冲突的客户提供服务，否则很可能会影响自己做出的职业判断。以审计师为例，审计师应当作为独立的第三方对客户的财务报表发表独立的审计意见，因此保持独立性是 The framework defines, and identifies the goal of, auditor independence. The audit firm can rotate a specific member of the team that faces this threat. so that they will be considered reasonable in the circumstances. Compliance with the fundamental principles may potentially be threatened by a broad range of circumstances. Safeguards. Study with Quizlet and memorize flashcards containing terms like Generally accepted government auditing standards specifically include all of the following ethics principles except: A. 2. Increased fees. Some clients may try to pressure auditors to influence their judgment. Your son's lawn mowing business is looking to purchase 3 large mowers for the upcoming season. Auditing, Test of Controls (ISA-330) & Substantive Procedures (ISA-330) 19 Comments Substantive Procedures in Auditing Substantive procedures are audit procedures performed to detect material misstatements in the figures and presentation & disclosures reported in financial statements. Audit Framework And Regulation A4. When safeguards are applied in an NFP audit, they must be documented. When firm is involved in recruiting senior employee for client, familiarity threat can arise. Policies that segregate audit professionals from non-attest services 3. Many threats fall into the following categories: 1. Auditors can avoid it by segregating their teams for each task. How the existing arrangements provide safeguards against the provision of non-audit services compromising independence. The auditor’s independence is highly objective and critical to the continuation of the audit in a […] . 0 Section A – Objectivity, independence and the audit Threats to objectivity 2. The client is also aware of this and threatens to discontinue the audit services if it discloses any financial irregularities. 1. A CPA should never act on behalf of management! We would like to show you a description here but the site won’t allow us. Familiarity threats can arise when auditors have close personal or professional relationships with auditees. Intimidation Threats Intimidation threats exist when auditors feel pressure or are coerced by clients or third parties to alter their findings, opinions, or conclusions. Finally, under any circumstances the identified threats to independence and the safeguards adopted should be aired thoroughly both within the audit firm and with client management and its audit committee. They are designed to generate evidence about … Nov 28, 2023 · Familiarity threat Safeguards; Association of the auditors with Client: Association arises from working together for a long period of time. The nature of the safeguards to be applied will vary depending upon For more practicing questions and answers related to threats and safeguards in real life situations explore auditorforum. Documentation Requirement: threats; the evaluation of the significance of those threats; and the use of safeguards that may serve to reduce threats to an acceptable level. If the firm decides to accept or continue the engagement, in spite of the significant threats identified, such decision should be documented including a description of the threats identified and the safeguards applied to eliminate or reduce the threats to Jun 1, 2021 · safeguards. * Self-interest threats [4] * Self-review threats [4] * Advocacy threats [4] * Familiarity threats [4] * Intimidation threats [4] ##### QUESTION 2 ##### The SAICA Code of Professional Conduct adopts a conceptual framework approach as its basis The safeguards for the advocacy threat are similar to the familiarity threat. The broad based “threats and safeguards” concept can be helpful in resolving a variety of ethical issues not explicitly covered in codes of conduct. Audit Framework And Regulation - Typical threats - Notes 4 / 8 Yellow Book independence is a big deal. It will explore the threats and safeguards in relation to one of the threats being the company under audit paying the audit fee. Integrity. The key GAGAS principles for OIG independence include the following: A with ABC Company will create self-review and familiarity threat. The audit firm rotation is also called MFR rotation and is getting popular in various countries due to the bad reputation of the familiarity threat. In case Mr. If you find yourself in this situation, examples of . during step 3 to reduce these . The firm should consider the significance of the assistance provided to the subject matter of the audit and consider the following: Familiarity threat. 4-Intimidation Threat. When an auditor has served a company for a long time and has become familiar with the management of the company, the audit report may lack objectivity. (2017). Next up Threat Safeguards So as mentioned finance director of GOLDEN CO is sister in law for the audit engagement partner this may create familiarity threat since the partner’s family member is preparing financial statement. But her office colleague Andrew Ferguson has a wife named Susan who owns financial interest in the form of 4% ownership Nov 24, 2022 · Assuming a management responsibility also creates a familiarity threat and might create an advocacy threat. The nature of the safeguards to be applied will vary depending upon Nov 20, 2013 · If the firm decides to accept or continue the engagement, in spite of the significant threats identified, such decision should be documented including a description of the threats identified and the safeguards applied to eliminate or reduce the threats to an acceptable level. And if you prepare financial statements in a Yellow Book audit, you need to be aware of the independence rules. CSQC 1. Undue influence threat 6. Examples: Promoting shares in an audit client; Acting as advocate on behalf of client in resolving disputes with third parties. He has joined ABC Limited as their Manager Finance, prior to the commencement of the current year’s audit. Auditors that work on an audit engagement may face threats due to several reasons. Nov 21, 2013 · If the firm decides to accept or continue the engagement, in spite of the significant threats identified, such decision should be documented including a description of the threats identified and the safeguards applied to eliminate or reduce the threats to an acceptable level. First, the Institute's ethical code forbids auditors to provide non-audit services to audit clients if that would present a threat to independence for which no adequate safeguards are available. The safeguards must eliminate the threats or reduce them to acceptable levels. Specifically, the Committee concluded that the acceptance of a gift or entertainment by a member can result in a financial self-interest and undue influence There are three safeguards can be implemented in order to reduce the self-interest, familiarity and intimidation threat. Keywords Audit Ethics · Auditor Independence · Code of Ethics Introduction Jun 8, 2020 · GAGAS recognizes the impact that threats to independence may have on the audit management team, including the IG. Auditors can use safeguards to eliminate threats. Safeguards apply at three levels: safeguards in the work environment, safeguards that increase the risk of detection, and specific safeguards to deal with particular cases. During the course of audit of HP Limited (HPL), the engagement partner has informed the firm that his brother has acquired 200,000 shares in HPL. Audit: Threats And Safeguards This essay will discuss in depth, whether external auditors can be independent given their reliance on the fee income from the company being audited. Section 523 Serving as a Director or Officer of an Audit Client rotating senior audit staff on an engagement after a fixed period to reduce familiarity threat; using separate teams (and partners) where additional services are offered to audit clients to reduce self review threat; using independent partners to review work where any ethical threat is identified; We would like to show you a description here but the site won’t allow us. , for an action for specific performance for collection of sum of The familiarity hazard is an additional potential threat that must be avoided. Advocacy 4 Feb 8, 2023 · Familiarity threat has a significant impact on the quality of audit work performed. In a well-known case, an auditor had a close friendship with the CEO of the auditee company. Self-interest 2. An ethical safeguard provides guidance or a course of action which attempts to remove the ethical threat. C25 The firm shall establish policies and procedures: (Ref: Para. It can lead to misstatements, loss of objectivity and independence, and failure to detect fraud. Self-interest threat: the tax advisory work will generate additional fees and the audit team may be reluctant to identify the misstatement in the financial statements or modify the audit opinion for fearing losing that work. , as in this revised sequence of events: Two audit team members familiar with the AICPA’s threats and safeguards approach knew that the firm’s consulting group was negotiating a client-firm joint marketing venture and wrote memos identifying a “self-review threat,” “advocacy threat We would like to show you a description here but the site won’t allow us. Threats: Self interest threat is created as the shares are held by a close relative of the engagement partner. Dec 2, 2020 · This section sets out specific requirements and application material when a self-interest, self-review, or familiarity threat might be created because an audit team member has recently served as a director or officer, or employee of the audit client. Mar 21, 2022 · Intimidation threat. 113, if a member of the audit team has financial interest in an entity when a director of the audit client is also known to have financial interest in that entity, it may create self-interest, intimidation or familiarity threats. These safeguards can be classified into three categories: external Nov 23, 2013 · Once a threat that is other than insignificant has been identified and evaluated, safeguards should be considered and applied as necessary. Feb 28, 2019 · 1. A circumstance or relationship may create more than one threat, and a threat may affect compliance with more than one fundamental principle. For instance, the audit firm might earn more than 30% of its audit income from a client. 290. If the threat is related to a nonaudit service that involves preparing accounting records and financial statements, you would also need to use figure 2. Q. Answer: C Diff: 3 Type: MC Page Ref: 63 Learning Obj. IAASA. For […] Threats and Safeguards 106th NASBA Annual Meeting Maui, HI . The threats and safeguards approach is from the perspective of a reasonable and prudent person who possesses both knowledge and experience, which is inherently appealing. B. Jon Jungkook, an audit staff at BH Associates Auditing and Accounting Firm, agreed to appear as a star witness in a civil case filed against one of their clients, SMARTEU Philippines Co. ’ (Section 100. to an . Evaluate whether the safeguard is effective . A is included in the Audit engagement the related safeguards may include: May 15, 2019 · In this case, the auditor would be forced to decline, discontinue, or withdraw from the audit engagement. Policies that identify financial interests or relationships jeopardizing independence 2. In addition there are circumstances in which safeguards cannot reduce a threat to an acceptable level, and guidance is given on this also. • Apply safeguards that are specific to the threat - For example, if a familiarity threat is created by a longstanding relationship between the Engagement Partner at the auditing Nov 19, 2013 · Now, lets know more about self-review threats and how can it affect auditing. Using this framework, the most common threats to an external auditor’s independence (and related safeguards) are: Self-interest Jan 22, 2017 · A secondary lesson should be that an audit firm’s independence policies, training, and communications should suitably emphasize to all professionals the fact that no mitigating safeguards will be deemed sufficient to reduce a threat to an acceptable level unless the approving party is comfortably persuaded that “a reasonable and informed Mar 19, 2018 · An example is a familiarity threat that exists because of a long or close relationship between senior personnel of the firm and the client or employee of the client with a key position. In business practices, when an auditor undertakes an auditing engagement, they have to measure and evaluate their independence and reliance on objectivity to the undertaken task. Ans. • Figure 1, “Generally Accepted Government Auditing Standards Conceptual Framework for Independence,” demonstrates the steps you would go through in evaluating any threat that is identified. Nov 3, 2023 · Threats and safeguards. 2 A threat to the auditor’s objectivity stemming from a financial or other self-interest conflict. The Committee identified specific threats to independence when a member accepts or offers gifts or entertainment from or to a client or a customer or vendor of the member’s employer. Case Study 2: Familiarity Threats. Professional Ethics. Audit firms may find they have insufficient staff with the levels of skill and experience required to audit the increased number of risky clients. Self-review Threat 5. Proposal of Bethan to be member of board shows movement of staff between firm and its own client, this can also lead to familiarity threat. Apr 17, 2019 · That is, the firm should evaluate the significance of threats and, when threats are significant, apply safeguards to eliminate or reduce the threat to an acceptable level. A was the audit manager during the last year’s annual audit of (FTML). 149 to 290. It arises when an auditor is being overtly or covertly coerced by an audit client or by another interested party. Serving the public interest. Apply safeguards as necessary to eliminate the threats or reduce them to an acceptable level 4. Intimidation threat with examples and related safeguards. Auditor’s independence refers to the state being of an auditor where he is […] Accountant must re-assess the situation to ensure that the threat had been effectively addressed. The management participation threat is the threat that a member will take on the role of client management or otherwise assume management responsibilities, such may occur during an engagement to provide non-attest (non-audit) services. Each of these points is discussed below. Jun 1, 2018 · According to the second FAQ, a firm can still perform an attest engagement if it has been determined that there is a significant familiarity threat to independence because one or more senior personnel have served on the attest engagement team for a long period — if safeguards can be applied to eliminate the threat or reduce it to an Syllabus A. Familiarity threat arises when auditor due to the nature of relation with the other party become too sympathetic that it compromised the objective requirement of code. The main types of threat to integrity, objectivity and independence that the firm faces as auditors are already well known (see 2024 FRC ES B 1. The threat that results from an auditor’s taking on the role of management or otherwise performing management functions on behalf of the audited entity, which will lead an auditor to take Nov 18, 2013 · If the firm decides to accept or continue the engagement, in spite of the significant threats identified, such decision should be documented including a description of the threats identified and the safeguards applied to eliminate or reduce the threats to an acceptable level. Sandip and firm have been asked to recruit non- executive director. Accounting, valuation, taxation, and internal audit are some of its examples. Auditors may prevent this by avoiding long-term customer connections and often shifting the audit team’s members. com. ) Does a long association with an audit ( or other attest) client constitute, by itself, a familiarity threat to independence? The familiarity threat is defined in the AICPA's Code of Professional Conduct as the threat of becoming "too sympathetic to the client's interests or too accepting of the client's work or product" due to a "long Ethical threats and safeguards . Evaluation of Threat and corresponding safeguards: Acceptance of undue advantage offered by the client is not in accordance with the principle of objectivity. When auditors encounter the risk of assessing their own work, this is known as the self-review threat. acceptable level. Office. audit failures to regulate against some such threats (such as long auditor–auditee relationships that may create familiarity and self-interest threats and the provisions of nonaudit services that may create self-interest threats). There are a variety of other familiarity threats and preventative strategies. They are the: •self-interest threat – where the firm’s or a covered person’s own interests might appear to be in conflict with those of the client or of the assignment; 4 days ago · to identify any misstatement included. Jun 10, 2021 · 1. The paper is finalized with a part reserved for Jul 19, 2022 · Self-interest threat exists as a result of the performance of a non-audit service by an auditor and amount relating to same is presented in the financial statements. Performance Audit, Special Examination, and Other Assurance Engagements. The concept of independence means that the auditor is working independently carrying out the objectivity of his audit performance. What are Some Safeguards against the Self-Interest Threat? There are several safeguards that audit firms can employ to protect against self-interest threats. Also suggest some safeguards to minimize their effects. Subsequently, were grouped the threats that were found and identified a series of safeguards for limit the threats to the auditor's independence. To do so, he'll need a loan from the bank. To prevent such risks from occurring, audit firms should take a number of precautions. Dec 22, 2023 · The second step to ensure audit independence is to apply the appropriate safeguards to eliminate or reduce the threats. , The standard that an auditor should be independent of mind and appearance in providing audits is included Mar 20, 2024 · Audit firms must establish safeguards, such as rotation of audit partners, to counteract familiarity threats and ensure the independence of the audit process. Jun 5, 2019 · Threat Safeguard; Long Association: Long Association of Senior Personnel with an Audit Client: Listed clients: 7 years plus 1 year of flexibility than a gap of two years for audit partner– In these 2 years gap period, cannot participate in the audit Or provide quality control for the engagement, Or consult with the engagement team or the client regarding technical or industry-specific issues Nov 4, 2022 · The threat posed by the overly helpful, smarty-pants auditor is a management participation threat. Intimidation Threat D. 1 Threats to objectivity might include the following: The self-interest threat 2. Circumstances that may create familiarity threats include, but are not limited to: • being responsible for the employing organisation’s financial reporting when an immediate or close family member A self-interest threat arises when the auditor has financial or other interests which might cause the auditor to be reluctant to take actions that would be adverse to the interests of the audit firm or any individual in a position to influence the conduct or outcome of the audit (for example, where the auditor has an investment in the audited entity, is seeking to provide additional services We would like to show you a description here but the site won’t allow us. Firstly, auditors need to consider whether they need to modify the assurance plan for the audit engagement. Self-interest Threat C. No safeguards are available or capable of being applied to reduce these types of threats to an acceptable level. Professional Ethics Previous Next ACCA AA Syllabus A. Rotational audit staff to reduce familiarity threat and to have a 2nd partner review audit files will deter these threats from occurring as they are detected in advance. GAGAS therefore emphasizes the need for auditors to identify any threats to their independence and to put in place any appropriate safeguards needed to mitigate them. The nature of the safeguards to be applied will vary depending upon May 29, 2023 · Familiarity threats: FAMILIARITY THREAT SAFEGUARDS Association of the auditors with Client Association arises from working together for a long period of time. A10) C(a) Setting out criteria for determining the need for safeguards to reduce the familiarity threat to an acceptable level when using the same senior personnel on an assurance engagement over a long period of time [In ISQC 1 THREATS SAFEGUARDS OBJECTIVE ASSESMENT A SELF REVIEW THREAT, FAMILIARITY THREAT & INTIMIDATION THREAT. Below I tell you how to maintain your independence—and stay out of hot water, Yellow Book Independence Impairment in Peer Review Suppose that--during your peer review--it is determined your firm lacks independence in regard to a Yellow Book Office. In the case of a multiple referrals threat, for example, Ghandar says the auditor can have an external reviewer look at certain files within the SMSF. Audit Framework And Regulation - Threats - Past Papers 3 / 8 Notes Video Quiz Paper exam CBE Mock Check out this exam question worked through in the classroom The guide also could have helped Hy Falutin & Co. the CPA does not have a difference of opinion related to the application of accounting principles, auditing standards, or other relevant professional standards D. Firstly, Emma Francis should be removed from the audit engagement team to prevent the possible threats brought by her. Familiarity and self-interest threats are created by using the same senior personnel on an audit engagement over a long period of time. If an auditor is exposed to a certain threat, he or she should either develop safeguards to reduce the threat to an acceptable level or resign from the audit engagement. threats. Michelle FCPA, engagement audit partner for BSL does not have any indicted self-interest threat as per the case. Evaluate the effectiveness of potential safeguards, including restrictions. A10) C(a) Setting out criteria for determining the need for safeguards to reduce the familiarity threat to an acceptable level when using the same senior personnel on an assurance engagement over a long period of time [In ISQC 1 Nov 21, 2023 · Familiarity Threat: A familiarity threat arises when a CPA has a close relationship with the client, typically due to having worked as an employee of the organization. When an auditor is required to review work that they previously completed, a self-review threat may arise. Advocacy threat: assisting with the challenge could be seen as promoting the position of the client. Evaluate the significance of the threats identified, both individually and in the aggregate 3. the CPA safeguards the position by also providing tax services B. : 3-5 Identify and evaluate threats to independence and recommend appropriate safeguards to eliminate or reduce the threats to an acceptable level 12) An intimidation threat occurs when A) it is difficult to believe the actions of management because there is a suspicion of irregular activity Sep 4, 2020 · Self-interest threat - Even after completion of an audit assignment, audit firms want to hold on to the clients to provide other services (like management consulting, accounting valuation etc. In some cases, auditors may have to choose between representing the client or continuing audit engagements. Links for threats on Auditorforum. We are keen to know your views in comments. Explain the meaning of each threat and give two examples of how each threat could arise. As the word “familiarity” is not limited to the ACCA AA Syllabus A. safeguards. Document safeguards: Safeguards are actions or other measures that an auditor applies to either eliminate threats or reduce identified threats to an acceptable level. An ethical threat is a situation where a person or corporation is tempted not to follow their code of ethics. Self-iriterest and intimidation threats B. Before we can look too closely at safeguards though, we need to know what the threats are. tr xj ht od th np mh kn qe ds