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Hi
There was threat in Stark Co that Company wants audit firm to represent the company in a dispute with tax authorities. In its explanation the examiner wrote that “This constitutes advocacy threat as firm may be seen as promoting that position of client is correct and this threatens independence”
There was a similar threat in Pink Partners & Co that Company has asked audit firm to represent them in negotiations to resolve some outstanding issues with tax authorities. In its explanation would it be correct to write the same above answer i.e “This constitutes advocacy threat as firm may be seen as promoting that position of client is correct and this threatens independence”
That is effectively what the answer to Pink says “There is a potential advocacy threat where the firm may promote an opinion on behalf of Golden, such that the independence of the firm is compromised.” Surely you can see this.
There is another threat that Client states that fee for taxation services should be based on a percentage of tax saved.
For its explanation what can we write? Will it be appropriate to write that “This constitutes self-interest threat as it will be difficult for the audit team to remain independent as audit team will want to save as much tax as possible in order to charge high tax fees”?
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