Ethical threats - part 3

In this lesson

1. 0:00 Advanced Audit and Assurance Code of Ethics
2. 0:19 Self-Review Threats Explained
3. 1:40 Banned Services for Audit Clients
4. 4:25 Safeguards Against Self-Review Threats
5. 6:33 Client Staff Joining Audit Firm
6. 7:29 Additional Rules for Public Interest Entities

About this lesson

are banned outright for audit clients. By mastering self-review threats and the safeguards that mitigate them, you'll be better equipped to navigate real-world ethical dilemmas in Advanced Audit and Assurance and protect audit quality. Self-review threats arise whenever non-audit services performed for a client are later relied upon during the audit. Common examples include preparing accounting records, designing IT controls, valuing assets that appear in financial statements, and reviewing internal audit work. The lesson walks you through specific scenarios—such as staff loaned to clients, client employees joining your firm, and corporate finance services—showing why each creates a self-review risk and how independence is compromised. For audit clients, certain services are strictly prohibited: non-routine bookkeeping, material valuations involving subjectivity, internal audit services that assume management responsibility, designing controls the auditor will rely on, and dealing in client shares. For public interest entities, the restrictions are even tighter—audit firms cannot prepare financial statements, perform material valuations, or provide IT systems significant to financial reporting. The lesson also covers practical safeguards: using separate teams for audit and non-audit work, conducting independent reviews, ensuring management retains responsibility for decisions, and preventing auditors from examining their own work.

Duration: 10m