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Hello Miss, why the audit partner Serving as a Director or Officer of an Audit Client at the same time will create self-interest threat?
Is it because it will compromise the partner’s objectivity in appointing/reappoint the external auditor? or due to the future possibility of employment by audit client? Thank you.
This is pretty fundamental – shareholders are principals and directors are agents. The directors are answerable to the shareholders. The WHOLE POINT of audit – the reason why it was “invented” was to give the shareholders an independent account of the shareholders’ stewardship. You should hardly need to break it down into threats – an auditor who is also a director of a client is not de facto independent.
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