Partner in BOD resign from the board remove from the team politely decline the engagement

sell or reduce shares/interest into

Financial Interests, remove from the team infrom to TCWG take second opinion
acceptable level

Family and close relationship

review all workings what she/he
(Joint venture, Joint Marketing, remove from team terminate the business relationship
performed
Distributorship)

Buying/selling goods and review all workings what she/he

Sample Answer -1
(what kind of threat + why)
a self-review threat would
create if the loan is special
terms and conditions.
no safeguarding remove from team
services with special terms performed
pre-issuance is require (before
Self-Interest Threat release the second year report)
(big or small threat + can safegurad or not) High % of Fees (15% of total
The self-interest threat created is so revenue in 2 consecutive inform to TCWG reduce to acceptable level
significant that cannot put any safeguard years) pre-issuance and post-issuance
into acceptable level. reviews are require if 15% over
significantly

(apply the case) In this case, the key issue is Ensure necessary competency and
(should accept or not)
whether 'normal terms and condition or not'. Low balling experience to perform the Apply ISA guidlines
Thus, the audit team
If it is special terms and condition for auditor, engagement effectively
member should not
the audit cannot accept this. Low fees (low balling), overdue
accept such loan.
fees, contingent fees (% on
review the firm's credit control withdraw or decline from
profit/revenue) Overdue fees inform to TCWG
procedures engagement
If needed, remove this team
member from audit team, and
make review all what she Contingent fees Not allow to charge
performed in the engagement.

Contingent Fees (% on Fees should be charged basis on client's business size,

profit/revenue) nature and risks (manpower, time and risk associated)

Commenting publicy in events Not allow/ no safeguard

Detemining or Advocacy Threat
changing JV entries Acting as an advocate for client in
Not allow/ no safeguard
litigation
Authorize or approve
transactions
Acting managment roles Audit Threats Promoting share in listed company Not allow/ no safeguard

Preparing source docs or

originating data Pressure on extent of work inform to TCWG withdraw from engagement

Threated with litigation inform to TCWG withdraw from engagement

Sample Answer 2
Imtimidation Threat Threated with dismiss or
inform to TCWG withdraw from engagement
Providing review of internal control The design of internal work is a replacement audit
system may create a self-review mgt responsibility so a review of
threat as these control will then be such may give rise to a situation better to collect before
reviewed by the firm who where the auditor is assuming mgt Threated with overdue fees inform to TCWG withdraw from engagement review the firm's credit policy
release the report
determining audit strategy. The responsibility by taking on the role
firm may be Reluctant to highlight of mgt.
error during the audit as this may
Providing non-financial services Non-listed company separate team take second opinion
highlight deficienies in the firm's
(such as tax, system set-up,
work on the additional services.
financial services, payroll and
account preparations) Listed company not able to provide politely decline
Mgt responsiblity can be avioded if
The codes states that the mgt the client take responsiblities for
monitoring the reports made and Self- Reveiw Threat
threat created is so significant that apply cooling-off period (2 years
taking the decision on Clients become auditors
no safeguard could be put in plact Past employement (auditor from join date)
to reduce it to an acceptable level. recommendations.
become client, client become
auditor vice versa). assign who has sufficient
Auditor become clients modify audit plan
experienced persons
However, if the client is a listed,
there are prohibited from
undertaking internal audit services
which relates to a significant part of Past employement (auditor
the controls vover financial become client, client become
reporting. auditor vice versa).

review all workings what she/he

Family or close relations remove from the team
performed
Familiarity Threat

review all workings what she/he

Long association with client rotate the team
performed

review all workings what she/he

Special gift and hospitality politely decline remove from the team
performed