What are some examples of the adverse interest threat?
The adverse interest threat is a threat that a member will not act with objectivity because the member’s interests are opposed to the client’s interests.
Examples of adverse interest threats include the following:
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What are examples of noncompliance that an audit team should further assess if they become aware of?
If the audit team identifies examples of potential noncompliance like the items listed in the visual below, they should assess the impact to the financial statements and the business as a whole. If deemed significant, the audit team should consider communicating the noncompliance to the audit committee or those charged with governance.
What are the threats to compliance that a CPA should be aware of?
Under the conceptual framework approach, members should identify threats to compliance with the rules and evaluate the significance of those threats. There are seven threats to compliance, which include the adverse interest threat, advocacy threat, familiarity threat, management participation threat, self-interest threat, self-review threat, and undue influence threat.
Is the audit team required to detect noncompliance with all regulations that the company is subject to?
The audit team is not responsible for preventing noncompliance with all regulation. However, it is the audit team’s responsibility to obtain reasonable assurance that the financial statements as a whole are free material misstatement whether due to fraud or error. So, at times, the auditor may be responsible for detecting noncompliance if the noncompliance could […]