1. Audit firms have often provided internal audit services to…
Question Answered step-by-step 1. Audit firms have often provided internal audit services to… Image transcription textTABLE 3.5 Non-audit services and likely threats Non-audit service Some threats Internal audit servicesself-review; self-interest; management; familiarity (see Chapter 17) Information technology self-review;self-interest; management; familiarity services Valuation services self-review; self-interest; manag… Show more… Show more 1. Audit firms have often provided internal audit services to companies that they audit. This can be quite attractive to companies, as they can avoid the costs of maintaining an internal audit department of their own. However, in Table 3.5 we suggested that self-review, management and familiarity threats might result, in addition to self-interest, from the provision of internal audit services. Explain why this might be so and suggest safeguards that should be in place. 2. We have shown self-interest as a threat in respect of all the non assurance services listed in Table 3.5. Explain why this is the case 3. Advocacy is seen as a threat in respect of tax services, litigation sup[1]port services, legal services and corporate finance services. What is meant by the advocacy threat and what safeguards may exist to mitigate the threat? 4. In Table 3.5 we have singled out familiarity threats in each case where we have deemed that the service will involve staff of the audit firm being in close contact with client staff for longer periods of time. In the case of recruitment and remuneration services, the familiarity threat may arise for other reasons. Now we ask you to consider recruitment and remuneration services as a whole and to explain the particular threats that may affect the audit firm and its staff. Suggest safeguards that may mitigate the threat. You may refer to paragraphs 290.209 and 290.210 of the IFAC CodeReference: Book Iain Gray, The AUdit Process Accounting Business Financial Accounting ACCOUNTING 0414113312 Share QuestionEmailCopy link Comments (0)
