Question

From the dropdown menu provided, select a form of threat to independence that relates to each of the safegaurds listed in the table below. Threats to Independence Safeguards Policies and procedures within an accounting firm identifying any staff with financial interest in an assurance client. Minimizing the provision of non-audit services to assurance clients. Policies and procedures prohibiting business relationships with clients. Partner and staff rotation policies. Avoidance of fee dependence.

Answer 1

1) Solution: Self-interest threat
Explanation: A self-interest threat occurs when the auditors is having a direct or indirect financial interest with company
2) Solution: Self-review threat
Explanation: A self-review threat occurs when the auditors are auditing their own work or their firm's work.

3) Solution: Advocacy threat
Explanation: When the auditor is involved in the client's promotion where auditor's objectivity can be compromised potentially, it results to the advocacy threat

4) Solution: Familiarity threat
Explanation: Familiarity threat occurs if the auditor personally closes with officers, employees, or directors of an audit client's company

5) Solution: Intimidation Threat
Explanation: Intimidation threat arises when auditor do not want to lose a client