Name and describe the seven (7) common threats (Step One-Identify Threats) that CPAs in public practice should be alert to
Name and describe the seven (7) common threats (Step One-Identify Threats) that CPAs in public practice should be alert to:
Step 1 – Identify threats:
The following are the seven broad categories of threats that AICPA notes:
Adverse interest threats: This type refers to the situation in which members with not act with objectivity as the member’s interest are opposed to interest of the clients.
Advocacy threats: This type refers to the situation in which member will promote the client’s interests or client’s position to the point where member’s objectivity or independence is compromised.
Familiarity threats: This type refers to the situation where a member will be sympathetic or too accepting to a client’s work given a close relationship with the client.
Management participation threat: This type refers to the situation where the member will take on the role of the management during the engagement to provide non attest services.
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