Page 372 - CA Final PARAM Digital Book.

QNO Self Interest Threat Vs Delf Review Threat Old Course-- (M18E)
780.010 TITANIUM CNO – PE.320
Distinguish Self-interest threat from self-review threat in an Assurance Engagement.
Answer Part I -- Relevant Standards & Laws
As per Code of Ethics of ICAI

Part II -- Requirements of Relevant Standards & Laws
➢ Self Interest Threat: Self-interest threats, which may occur as a result of the financial or other
interests of a professional accountant or of a relative.
Circumstances that may create self-interest threat
• A financial interest in a client or jointly holding a financial interest with a client.
• Undue dependence on total fees from a client
• Having a close business relationship with a client.
• Concern about the possibility of losing a client.
• Potential employment with a client.
• Contingent fees relating to an assurance engagement.

➢ Self-Review Threat: Self-review threats, which may occur when a previous judgment needs to
be re- evaluated by the professional accountant responsible for that judgment;
Examples of circumstances that may create self -review threats
• The discovery of a significant error during a re-evaluation of the work of the professional
accountant in public practice.
• Reporting on the operation of financial systems after being involved in their design or
implementation.
• Having prepared the original data used to generate records that are the subject matter of
the engagement.
• A member of the assurance team being, or having recently been, a director or officer of
that client.
• A member of the assurance team being, or having recently been, employed by the client
in a position to exert direct and significant influence over the subject matter of the
engagement.
• Performing a service for a client that directly affects the subject matter of the assurance
engagement.

QNO Engagement specific safeguards for threats- Old Course-- (M19E)
780.050 TITANIUM CNO – PE.320
A professional accountant in public practice is always subject to various threats in compliance with
fundamental principles of his profession and you, as a professional accountant, is worried about
engagement specific threat in your audit assignment of M/s Soft Ltd. and want to implement some
measures to eliminate and reduce the same. Enumerate some engagement specific safeguards which
you may introduce in your work environment to ward off such threats.
➢ Engagement-specific safeguards in the work environment may include
• Consulting an independent third party, such as a committee of independent directors, a
professional regulatory body or another professional accountant.
• Discussing ethical issues with those charged with governance of the client.
• Disclosing to those charged with governance of the client the nature of services provided and
extent of fees charged.
• Involving an additional professional accountant to review the work done or otherwise advise
as necessary.
• Involving another firm to perform or re-perform part of the engagement.
• Rotating senior assurance team personnel.

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