This topic contains 1 reply, has 2 voices, and was last updated by 
Kim Smith 3 weeks, 5 days ago.
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- October 21, 2018 at 2:39 pm
In the question (b)
Can u help me to explain how management threat arises ?
I do not understand how self interest and familiarity review arose in this question
October 22, 2018 at 7:47 am“Management threat” is not a recognised separate category and would need clarification. Most likely it would be used to mean the threat of undertaking something that is the management’s responsibility. For example, it is management that is responsible for the preparation of the financial statements and internal controls – if an auditor were to assume responsibility for these it would create a self-review threat (when they audit the financial statements/internal controls).
The answer explains how familiarity threat (referred to as “the latter”) arises – that the auditor has aligned their views/interests with those of management. The answer doesn’t say that self-interest arose in this question – it just states that assuming a management role could create a self-interest threat – this would most likely be because the work would carry a fee.
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