Fees from one audit client form a large and growing proportion of an audit firm's total fee income. Which threat arises and which safeguard is most appropriate?

Correct answer: A) A self-interest threat; disclose the position to those charged with governance and arrange an independent review of the audit work

Explanation

Fee dependence creates a self-interest threat, because the firm may be reluctant to upset a client whose fees it cannot afford to lose. Appropriate safeguards include disclosure to those charged with governance and an engagement quality review by someone outside the team, or reducing the work for the client. The other threats and safeguards do not address economic dependence.