ACCA Audit and Assurance (F8) Practice Exam

Which of the following is a threat to objectivity and independence in an audit?

1. Self-Interest

2. Future employment opportunities

3. Client satisfaction

4. External competition

The correct answer is: Self-Interest

The correct answer, self-interest, represents a significant threat to objectivity and independence in an audit. When an auditor has a personal stake in the outcome of the audit, whether financially or otherwise, it can compromise their ability to remain impartial. This threat arises when an auditor could benefit personally from decisions or outcomes related to their audit work, leading to potential bias in their assessments and judgments. In the context of an audit, maintaining independence and objectivity is paramount. Allowing self-interest to influence audit procedures or conclusions creates a scenario where the auditor's duty to provide an unbiased and fair assessment is jeopardized. The potential for self-interest can manifest in various forms, such as financial investments in the client, receiving bonuses based on the client's performance, or even personal relationships that could cloud judgment. Other factors, while they may introduce some level of pressure or concern, do not pose the same direct threat to the core principles of objectivity and independence. Future employment opportunities could lead to a conflict of interest but are often managed through specific protocols and disclosures. Client satisfaction, while important for maintaining good relations, should not impact the auditor's ability to report honestly on the financial position of the client. External competition can create pressures, but it impacts the firm at a broader