ACCA AA · Chapter 4 · Question 3 of 11
The audit engagement partner of Pellucid Co discovers that her brother has just been appointed as Pellucid Co's finance director. Which threat to independence does this create?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Familiarity threat
Explanation
A close family member holding a position with significant influence over the financial statements creates a familiarity threat, because the partner may be too sympathetic to or trusting of his work. The threat is so significant that the partner should be removed from the engagement.
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