Navya & Associates maintains the books of account of a client and then audits the financial statements prepared from those books. The main threat to independence created is:

Correct answer: B) Self-review threat

Explanation

A self-review threat arises when the auditor evaluates results of a service previously performed by the auditor's own firm, such as financial statements prepared from records it maintained. The firm may not appropriately evaluate its own work. For company audits, section 144 of the Companies Act, 2013 also prohibits the auditor from rendering accounting and book-keeping services.