Safeguards against self-review threat Ensuring that the accounting service is not performed by a member of the audit team.
In a small company it might be the responsibility of individuals to perform specific tasks even though there will not be a full-time position.
Self-interest Here the auditor may have a financial or other interest in a matter. Each of these points is discussed below. A threat to independence is anything that means that the opinion of an auditor could be doubted.
This applies to the audit manager also.
Policies and procedures that will enable the identification of interests or relationships between the firm or members of engagement teams and clients. The audit committee should approve the appointment and termination of appointment of the head of internal audit. For example, in an external audit context: a member of the audit team having a close family member who, as a director, officer or other employee of the audit client, is in a position to exert direct and significant influence over the subject matter of the audit engagement a former partner of the firm being a director, officer or other employee of the audit client, in a position to exert direct and significant influence over the subject matter of the audit engagement long association of a senior member of the audit team with the audit client and acceptance of gifts or hospitality, unless the value is clearly insignificant, from the audit client, its directors, officers or employees.
A lot of it goes to perception, but there are no obvious safeguards that could satisfy a reasonable third party that it is a truly independent and objective audit. The purpose of this article is to assist candidates in terms of knowledge and question technique when tackling a question on ethics.
Therefore the auditor may not act with objectivity and independence.
Its aim is to identify existing and potential management weaknesses and recommend ways to rectify them.