Professional accountants face many threats in the performance of their duties that may negatively affect accountants’ objectivity and independence. One of such threats is intimidation threat which may arise from close business relationships, family and personal relationships, and assurance staff members moving to employment with client as well as actual and threatened litigation.
Required:
Explain FOUR safeguards you will consider to deal with actual and threatened litigation as a professional accountant.(6 marks)
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- Disclosure to audit committee – disclosing to the audit committee the nature and extent of the litigation
- Exclusion from audit team – removing specific affected individuals from the engagement team
- Additional reviewer – involving an additional professional accountant on the team to review work
- Resignation from engagement – if the litigation is at all serious, it may be necessary to resign from the engagement, as the threat to independence is so great.