Lowballing

It can be useful sometimes to look at definitions/meanings:

Self-interest threat – the threat that FINANCIAL of other interest will INAPPROPRIATIELY influence a professional accountant’s (i.e. auditor in the context of an audit assignment) judgment or behaviour.

If you were performing a first audit for a client having tendered a fee which was, in commercial terms, too low, and discovered some issues/discrepancies that required more investigation than you “budgeted for” (in coming up with your low fee), might that not improperly influence your judgment/behaviour? Maybe you ignore it in the interests of keeping the costs as low as possible.

Of course YOU don’t, because you have integrity and act professionally, but there is still a PERCEIVED risk which affects audit quality.