Hi teacher,
I just wonder whether the case belongs to Self-review threat or self-interest threat.BPP says it belongs to self-interest , but I am confused about it." A private company has requested that its auditor prepare a valuation report on a prospective acquisition target in order to help it obtain finance for the acqusition from its bank. If auditor agrees to take on this assignment,..."
PS : I agree that the case also belongs to advocacy threat.
Ask the Tutor ACCA AA
Self-review threat or self-interest threat
10y ago#1If it is a self-review threat then normally the accountancy firm has to check its own work in an audit. Here there does not seem to be the idea of preparation followed by review.
Hi sir,
The auditor charges fees on the basis of the level of valuation, if he values the company's asset over its normal level, he will get more returns accordingly, leading to self interest threat. I just wonder if my view may be correct in some extent.
PS:I have trouble understanding your view of Here there does not seem to be the idea of preparation followed by review.
10y ago#3Your first example can cause self interest.
Self-review means that you are reviewing your own work. Valuing something for a purchase does not do that, but valuing something n the FS would because you are valuing then auditing.
Sign into reply to this topic.