Sir,for PYQ Mar/June 2016 Q4(b) "Review of internal control"
Why design , implementation and maintenance of internal control(mgt responsibilities) by the auditor, the self-interest and familiarity threat would arise?
Thank you.
Ask the Tutor ACCA AAA
Mumbai Co
6y ago#1Because the audit firm could be considered to be aligning its views and interests to those of management.
Can give an example for self-interest threat arise in this case? still not clear about it
Thank you.
6y ago#3Per the code:
Definition: Self-interest threat – the threat that a financial or other interest will inappropriately influence the professional accountant’s judgment or behavior.
For example, deciding which recommendations of the firm to implement will create self-review and self-interest threats.
If the auditor was allowed to implement internal controls it might choose the easiest or the cheapest or whatever is management's preference - however unconscious, the auditor would be influenced.
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