Hi, could someone please help in explaining to me why (as according to Q4 in June 2010 paper): (1) a staff discount offered to the audit team would count as a familiarity threat? wouldn’t it be a self-interest threat since now the audit team wouldn’t want to modify the report at the risk of losing the client, and hence their discount?
(2) the fact that the audit partner and the finance director of the client company are friends is a self interest threat? wouldn’t it be a familiarity threat since their association will likely make the audit more trusting of the finance director’s work?
Please help explain why my view differs from that in the examiner’s report!