AA – L2 – SA – Q4.3 – Audit Threats

Threat created by client pressure on audit opinion.

Question

Jade Ltd, an audit client of Keats & Co, is unhappy with the conduct of the audit and has threatened to replace Keats & Co if the firm does not issue the opinion that Jade Ltd wants. Which of the following threats is created by this situation?

A Familiarity

B Advocacy

C Management

D Intimidation

Answer

Explanation:
The situation describes Jade Ltd pressuring Keats & Co to issue a specific audit opinion by threatening replacement, which constitutes an intimidation threat. Intimidation occurs when an auditor’s objectivity is compromised due to pressure or threats from the client. Familiarity, advocacy, and management threats do not apply here, as they involve different ethical issues (e.g., long-term relationships, promoting the client, or assuming management roles). Option D is correct.

Tags: Audit Threats, Auditor Independence, ICAG, Intimidation, Professional Ethics
Level: Level 2

Topic: Professional and Ethical Considerations

Uploader: Salamat Hamid