Page 361 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Financial Interest: A professional accountant having a direct financial stake in a client's business, potentially
compromising their objectivity and independence.
(For Assignment)
Low Fee: An accountant offering a low fee to secure a new engagement, which may be inadequate to meet the
necessary professional standards, potentially resulting in compromised service quality.
(During Assignment)
Confidentiality: An accountant having privileged access to confidential data, with a risk that this information
could be used for personal gain, compromising their integrity.
Error Discovery: An accountant identifying a major mistake in a previous service performed by a colleague
within the same firm, indicating a potential lack of quality control or professional competence.(Protecting his
firm’s reputation)
Self-review Threats
Evaluation after Implementation: A professional accountant is evaluating and reporting on the efficiency and
functionality of financial systems after they have only implemented it.
Assurance after Preparation: The accountant who is conducting the assurance engagement has also been
responsible for preparing the original data used to generate the records being reviewed.
Advocacy Threats
Promotion: Accountant actively promotes the interests or shares of their client, possibly through marketing,
advertising, or public relations activities.
Advocacy: Accountant acts as an advocate in legal proceedings or disputes with third parties, providing expert
testimony, gathering evidence, or presenting arguments to support their client's case.
Lobbying: Accountant lobbies to influence the creation or amendment of legislation in favor of their client,
advocating for specific laws, regulations, or policies that would benefit their client's interests.
Familiarity Threats
Close Family Member Relationship: This refers to a situation where a professional accountant has a close or
immediate family member who holds a position as a director or officer of the client.
Long Association with the Audit Client: This pertains to a scenario where a member of the audit team has
had a long-standing relationship with the audit client.
Recent Engagement Partner: This occurs when a director, officer, or employee who has significant influence
over the subject matter of the engagement has recently served as the engagement partner.
Intimidation Threats (Shortcut: In Sequence of Severity)
Public Disclosure Threat: An accountant, having accepted a significant gift from a client, is threatened with
the public revelation of this acceptance.
Threatened Dismissal: A professional accountant is at risk of being removed from a client engagement or the
firm due to disagreements over professional matters.
Promotion Contingency: An accountant is told that a planned promotion will only materialize if they consent
to an inappropriate accounting treatment.
Expertise Pressure: An accountant feels obligated to concur with a client's judgment because the client has
superior expertise on the subject matter.

(CNO-PE.360) Examples of each Category of Threat when undertaking a professional activity (CA’s in
Service):
The following are examples of facts and circumstances within each of those categories that might create threats
for a professional accountant when undertaking a professional activity:
Self-interest Threats (Shortcut: In Sequence of Most Beneficial)
Financial Interest: A professional accountant holding a financial interest in, or receiving a loan or guarantee
from, the employing organization.

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