ACC551 - Ch2

A self-interest threat refers to the threat that can occur when an accounting firm or its staff

• is threatened by the client's staff or directors.

• has a financial interest in an audit client.

• needs to form an opinion on their own work or work performed by others in the firm.

• acts on behalf of its assurance client.

Which of the following is an example of a familiarity threat to independence?

• a bank account held with the client

• performing services for the client that are then assured

• owning shares of the client

• a former partner of the assurance firm holding a senior position with the client

Intimidation threats to independence include

• the threat that that the client will use a different assurance firm next year.

• a close business relationship with the client.

• representing the client in a legal dispute.

• preparing information for the client that is then assured.

What key groups have a professional link with the external auditor?

• client's board of directors, audit committee, and prospective shareholders

• client’s shareholders, the board of directors, audit committee and the internal audit team

• client’s shareholders and prospective shareholders and board of directors

• client’s shareholders only

Safeguards to independence are created by

• the general public.

• the profession, legislation or regulation.

• lawyers.

• dependent directors.