A self-review threat in ACCA is an ethical risk occurring when an auditor or accountant reviews their own work or judgments made by their firm, compromising objectivity. It happens when previous non-audit services (e.g., preparing financial statements) influence the current audit, making it difficult to impartially evaluate errors.
A self-review threat is the threat that a firm will not appropriately evaluate the results of a previous judgment made or an activity performed by an individual within the firm as part of a NAS on which the audit team will rely when forming a judgment as part of an audit.
These fundamental principles may be subject to areas of threat of self-review, self-interest, advocacy, familiarity, and intimidation.
The self-review threat is the threat that a member will not appropriately evaluate the results of a previous judgment made or service performed or supervised by the member or an individual in the member's firm and that the member will rely on that service in forming a judgment as part of another service.
Most Difficult ACCA Subjects (with Pass Rates)
Students usually fail an exam because they do not have the necessary knowledge OR they have poor exam technique OR a combination of both – the first step to success in studying for your retake is to understand the reason you failed.
Self review threat arises when an auditor reviews the work they have done or work being affected by the team they work with. This atmosphere can sway the auditor from being objective. They sit atop a quandary. They audit the mistakes they find, which could lead to professional embarrassment or liability.
(1996) provided a conceptual definition that we endorse. They defined what we term self-threat as follows: “when favorable views about oneself are questioned, contradicted, impugned, mocked, challenged, or otherwise put in jeopardy” (p. 8).
There are five potential threats to auditor independence: self-interest, self-review, advocacy, familiarity, and intimidation. Any lack of independence compromises the integrity of financial markets.
The 5 Cs of audit (Criteria, Condition, Cause, Consequence, Corrective Action) are a framework for structuring clear, actionable audit findings, explaining what should be (Criteria), what is found (Condition), why it happened (Cause), what the impact is (Consequence/Effect), and how to fix it (Corrective Action/Recommendation) to drive organizational improvement and compliance.
A letter of weakness is a report that contains information stating the flaws in the internal control mechanism. The auditor will need clear information on internal control as part of the planning process; however, that does not mean that the auditor needs to test the internal control in all audits.
Types of ethical threats: self-interest, self-review, advocacy, familiarity, and intimidation. Safeguards to manage threats to ethical principles. The purpose of ethics codes for audit and accountancy professionals.
The four key components of audit risk, as defined by the Audit Risk Model, are Inherent Risk, Control Risk, Detection Risk, and Acceptable Audit Risk (or Overall Audit Risk), representing the susceptibility of accounts to misstatement, failures in internal controls, the auditor's chance of missing errors, and the acceptable level of risk for the audit, respectively, all combining to determine if a materially misstated financial statement receives an inappropriate opinion.
Self-interest threats: Threats arising from auditors acting in their own interest. Self-review threats: Threats arising from auditors reviewing their own work or the work done by others in their firm.
Fighting – Physical altercations between individuals or groups. Threatening or Intimidating Behavior – Verbal or physical actions intended to control, dominate, or scare others.
Other examples of self-interest threats might be the offer of goods or hospitality to a covered person within the firm, which might influence, or be seen to influence the final audit or assurance opinion.
Self-Review Threat
A self-review threat exists if the auditor is auditing his own work or work that is done by others in the same firm. Example. The auditor prepares the financial statements for ABC Company while also serving as the auditor for ABC Company.
What an auditor won't look at
'Seven threats to ethics' looks at ideas that destabilize us when we think about standards of choice and conduct: the death of God; relativism; egosim; evolutionary theory; determinism and futility; unreasonable demands; and false consciousness.
For most, Audit and Assurance (AA) is generally considered to be the most difficult ACCA exam paper with an average pass level of 37%.
They sometimes demonstrate emotional volatility (eg being initially enthusiastic but then disappointed or even angry about things). Often, they are insightful but overly sceptical about others, which can make them appear reserved, aloof and risk-averse. 'Moving against'.
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