JANSEN & CO sept 18 part a) i)

It is only saying that there MAY be a PERCEPTION of self-interest. If the client gets the loan and the expansion (that looks to be quite significant) goes ahead, the audit fee will presumably increase.

Noah098 wrote:doubt 2: in he same subpart

For example, it could increase the risk that the auditor overlooks to obtain confirmation of the new loan in the audit work.

It would be helpful if you could think through your questions - perhaps draft in a doc and then copy and paste them into the forum?

You don't have to understand every point in the model answers. It's simply trying to say that the auditor may be "blinkered" (rather than objective) when auditing the loan as it eventually appears in the financial statements because they've already come across it in the other work. Knowing that $22m was the amount of the loan applied for wouldn't be sufficient audit evidence.