An audit manager has worked on the same client for many years and has become close friends with the client's finance director. Which threat is most likely to arise?

Correct answer: D) Familiarity threat

Explanation

A familiarity threat arises when, because of a long or close relationship, an accountant becomes too sympathetic to the client's interests or too accepting of their work. Safeguards include rotating senior staff and having the work reviewed by someone not involved in the engagement.