Week 4 - Threats to Independence Flashcards
1
Q
What are the five threats to independece?
A
- management
- advocacy
- self-interest
- self-review
- intimidation
- familiarity
2
Q
Management
A
Management roles conducted by the auditor, such as implementation of IT systems (you are making management decisions for your client aka then auditing your own work)
3
Q
Advocacy
A
Trading in client shares, which in turn promotes the client
4
Q
Self-interest
A
Financial interest in a client e.g shares in company
5
Q
Self-review
A
Where the audit firm reviews financial statements prepared by itself
6
Q
Intimidation
A
Threat to replace an auditor
7
Q
Familiarity
A
Relationships with client staff, such as a family member employed by the client
8
Q
What is the mneumonic to remember the threats to independence?
A
MASSIF
