Which of the following scenarios represents a 'self-interest threat' under the AICPA Code of Professional Conduct?

Answer options:

The auditor promotes the client's securities in an IPO.

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

The auditor takes on the role of management.

The auditor audits their own work.

How to approach this question

Match the scenario to the 7 Threats (Self-Review, Advocacy, Adverse Interest, Familiarity, Undue Influence, Financial Self-Interest, Management Participation).

Full Answer

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

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

A self-interest threat exists when the member could benefit, financially or otherwise, from an interest in, or relationship with, a client. Relying heavily on a single client for fees creates a financial self-interest that might compromise objectivity.

Common mistakes

Confusing Advocacy (promoting) with Self-Interest (benefiting).

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