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Hello tutor, I don’t understand the statement of BPP study text. The statement is extracted:
“Providing recruitment services in relation to the senior management of an audit client, particularly those able to affect the financial statements, creates a self-interest threat for the assurance firm”
To be honest, I don’t understand why it is the self-interest threat as audit firm may not obtain any financial interest. Thanks for your help, thanks tutor
Because the person recruited has some position of influence that may be relevant to the audit appointment. For example, the board is more likely to propose the reappointment of the outgoing auditor if that appointment has the support of the finance director.
Self-interest doesn’t have to appear directly financial – it can be indirectly financial – in this case through keeping a client – of it could be increased likelihood of being offered to provide non-audit services.
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