ACCA Advanced Audit and Assurance (AAA) Practice Exam

What does the intimidation threat primarily involve?

1. Pressure from management to alter results

2. Relationships leading to biased judgments

3. Review of audit procedures

4. Subjective financial evaluations

The correct answer is: Pressure from management to alter results

The intimidation threat primarily involves pressure from management to alter results. In the context of auditing, this threat arises when management exerts undue influence on auditors, creating an environment where the auditors might feel coerced into making decisions or modifications that do not necessarily reflect the true financial position of the company. This pressure can hinder the auditors' objectivity and independence, leading to potential ethical dilemmas where the integrity of the financial reporting may be compromised. Financial audits require a high level of professional skepticism and independence, and when auditors face intimidation, their ability to perform their duties impartially is severely affected. This can result in the auditors being less likely to challenge management's assertions or investigations, ultimately impacting the reliability of the audit outcome. While the other options describe relevant concepts related to audit risks, they do not capture the essence of the intimidation threat as effectively as the notion of pressure from management to alter results. Relationships leading to biased judgments refer more to the familiarity threat; the review of audit procedures pertains to compliance and methodology rather than ethical pressures; and subjective financial evaluations relate to judgment in assessing financial information, which is distinct from the intimidation context.