Which of the following scenarios represents a 'Self-Interest Threat' to independence under the AICPA Conceptual Framework?

Answer options:

The auditor promotes the client's securities in an initial public offering.

The auditor relies on the client for 25% of the firm's total revenue.

The auditor has a long-standing relationship with the client's CEO.

The auditor takes on the role of management during the audit.

How to approach this question

Map threats: Money/Job = Self-Interest. Promoting = Advocacy. Long relationship = Familiarity. Doing their job = Mgmt Participation. Checking own work = Self-Review.

Full Answer

B.The auditor relies on the client for 25% of the firm's total revenue.✓ Correct

A self-interest threat exists when the member could benefit, financially or otherwise, from an interest in, or relationship with, a client. Excessive fee dependence is a classic financial self-interest threat.

Common mistakes

Confusing Self-Interest with Advocacy.

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