ACCA Advanced Audit and Assurance (AAA) Practice Exam

What type of threat arises when auditors review their own work or advice during an assurance engagement?

1. Self-review threat

2. Advocacy threat

3. Familiarity threat

4. Intimidation threat

The correct answer is: Self-review threat

The self-review threat occurs when auditors are in a position where they have to evaluate the results of their own previous work or the advice they have provided. This situation can undermine the auditor's objectivity since they may be biased in favor of their past judgments. For example, if an auditor is tasked with reviewing financial statements that they previously helped to prepare or gave advice on, there is a risk that their evaluation may be less critical because they may consciously or unconsciously want to uphold the quality of their prior work. This threat is significant because it challenges the fundamental principle of independence, which is crucial for providing reliable and impartial assurance services. Auditors must avoid situations where they evaluate their own work to maintain their objectivity and credibility in the assurance engagement.