Safeguards

“Also, generally speaking how do i know if a threat can be reduced to an acceptable level?….and how would i know what an acceptable level is?”

Skill, judgement and experience (and knowledge of the client and the level of trust that you feel justified in placing in the client and whether the client has a history of unreliability and ….)

In the article it suggests that there is a danger that the auditor, in performing their review of the internal control system, is in danger of taking on the role of management ie of assuming management responsibility

The second part of the article goes on to re-affirm that it is management’s responsibility to design, implement and monitor the company’s internal control systems

You paraphrase an extract from the article as “In the first example it mentions that regarding mgmnt responsibility there is no safe guard”

I can’t see that in the article

In fact, the article states in bold “When the professional accountant determines that appropriate safeguards are not available or cannot be applied to eliminate the threats or reduce them to an acceptable level, the professional accountant shall eliminate the circumstance or relationship creating the threats or decline or terminate the audit engagement.”

So, where the auditor determines that there are no safeguards available there is little choice but to resign from (or not undertake) the assignment

Is that OK for you?