Page 42 - AA Integrated Workbook STUDENT 2018-19
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Chapter 4




               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









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