ICAEW ARF · Chapter 10 · Question 3 of 12
An audit firm prepares a client's financial statements and then audits them. Which threat to objectivity does this create?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Self-review
Explanation
A self-review threat arises when the firm evaluates its own previous work, as the audit team may fail to identify, or be reluctant to report, errors in statements their firm prepared. Advocacy involves promoting the client's position, intimidation involves pressure on the auditor, and familiarity arises from close relationships.
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