Auditor Threats of Independence

Question 1

Self Interest

Answer 1

The threat that financial or other interest will affect the professional auditor judgements

(clients ask to look for another clients because they want the commission)

Question 2

Self review

Answer 2

• A threat where the professional accountant will not appropriately evaluate the previous professional judgement made

Eg. The auditor and the accountant do the same (Audit and Account)

Question 3

Advocacy

Answer 3

• The Threat where the professional accountant promote the position of the client to the point where
• It will affect their objectivity and Indepence

Question 4

Familiarity

Answer 4

• The threat that happen due to the close relationship of the clients
• They will become too symphetitic and just accepting the clients work because have long/ close relationship

Question 5

Intimidation

Answer 5

-The threat that will affect the objective of the professional accountant

-Due to the pressures, because of the client position, expertise

Question 6

What is threats of Independence

Answer 6

• Self Interest
• Self Review
• Advocacy
• Familiarity
• Intimidation

Question 7

What is the major threats of Independence

Answer 7

• Holding Official Position (The directors should not be an Audit Committee)
• Financial Interest (Have shares directly, but the shares are hold by the family)
• Provision for the non audit services (the separation of the non- audit services)
• Relationship (the tenure of the audit firm & the company= 5 years)
• Compensation scheme (fee, gifts, beneficial interest)
• Time pressure (don’t have the time do the work-vouching)