Page 30 - Microsoft Word - 00 IWB ACCA F7.docx

Chapter 3

1.4 Threats to independence

The auditor must identify any threats to independence, assess the significance of the
threats and implement safeguards to mitigate or eliminate the threat.

Threat Definition Examples

 Owning shares in a client

Where the auditor has a  Fee dependency
financial or other interest
Self-interest that will inappropriately  Gifts and hospitality
influence their judgment or
behaviour  Employment with the client

 Overdue fees

 Long association
The auditor becomes too
sympathetic to or trusting of  Personal relationships
Familiarity
a client and loses
professional scepticism  Movement of staff between the
firm and client

The auditor will be unlikely  Accounts preparation
to admit to errors in their
Self-review own work, or may not  Internal audit
identify the errors in their
own work  Tax computations

 Representing the client
Promoting the position of
Advocacy the client or representing  Promoting the client
them in some way  Negotiating on behalf of the
client

 Fee dependency

Actual or perceived
pressures from the client, or  Personal relationships
Intimidation attempts to exercise undue  Audit partner leaves to join the
influence over the client
assurance provider
 Litigation with the client

26