Question

SOX forbids audit firms from selling actuarial services to its clients. This rule is justified because such services would constitute what type of threat to the auditor's independence.

Select one:

a. Management participation threat

b. Self review threat

c. Advocacy threat

d. Familiarity threat

Answer 1

Solution:

SOX forbids audit firms from selling actuarial services to its clients. This rule is justified because such services would constitute "Self review threat" to the auditor's independence.

Hence option b is correct.

Explanation:

Self review threats occur when a previous judgment needs to be re-evaluated by a chartered accountant responsible for the judgment.