# data[].attributes.body
Helo

# data[].attributes.body
Threats

# data[].attributes.body
advocacy threat

# data[].attributes.body
h

# data[].attributes.body
The safeguard to this would be to remove the person that is advising the client from the engagement and to have someone other than the one who advised the client to review th

# data[].attributes.body
hat to do when these duties conflict.  A specific safeguard in this case would be to decline to provide the advice on how to structure 

# data[].attributes.body
Selecting the audit client's most senior accounting personnel by directly interviewing applicants for those positions.

If a CPA performed this service for a audit clients business it would go under a few different threats to independence. First example would be the Self-Interest threat. I believe this threat would happen because the CPA is in charge of auditing their client, but if they have such strong control over who the client hires in the accounting department it could mean they hire people they think would benefit their duty to audit the company. This is also connected to the Self-Review threat. It says in page five of the "Institute of Chartered Accountants in England & Wales",   "performing services for an audit client that directly affect the subject matter of the current, or a subsequent, audit engagement". I think hiring senior accountants would directly affect the audit being preformed. The third threat is from our book. It is the Management Participation Threat. This is when the CPA takes on the role of management for their client.

One safeguard the audit client can use is to have  competent employees to make managerial decisions. This means they can make all the interviews and hire the accounting employees so the CPA performing the audit service does not have to be involved.  The audit firm can also prefor

# data[].attributes.body
B. The threat is the CPA could do somethings to avoid some client’s responsibility for the public interest as a consultant. I think there are some safeguards to this situation. First, as a CPA, he must ensure the financial statements are true and correct and disclose true information to the public. He must first finish the audit job.  Then, as a consultant, they could daily give advice to the client, but they must follow the AICPA code. He has to separately do his job as a consultant, and should follow the same ethical standard in this different position.

# data[].attributes.body
Advising on structuring its business transactions would be a self-review threat.  Quite simply, it would be reviewing the very same documents that it created for the client.  The safeguard most likely have to be implemented by the firm.  The policy would be to not provide simultaneous consulting and auditing service for its clients.

# data[].attributes.body
A. Advising on how to structure its business transactions to obtain specific accounting treatment under GAAP would allow for the self-review threat. The safeguard to this would be to remove the person that is advising the client from the engagement and to have someone other than the one who advised the client to review the information.

# data[].attributes.body
A. Providing advisory on the structure of transactions in the detailed situation is an example of a self-review threat. A "Chinese Wall" policy serves as a safeguard against such a threat. Such a policy forms a separation of duties with a firm where attest and advisory are offered through separate partners or departments. However, such a policy is easy to work around as CPAs are human. Better is if a CPA firm puts into a place a policy that prohibits the firm from offering services such as detailed to the same client simultaneously. In writing that I can already hear the caterwauling.

# data[].attributes.body
C. Present in this situation is management participation threat. A safeguard against this threat could be an internal review process to determine if this kind of consultation can be taken on without violating professional standards.

# data[].attributes.body
C) Selecting the audit client's most senior accounting personnel by directly interviewing applicants for those positions.
Allowing a senior personal from the Audit firm to interview potential accounting staff would be Management Participation Threat. (establishing and maintaining internal controls for the client pg 216).

Safeguards implement by the CPA firm, informing the client that interviewing accountants would violate the CPA firm of Independence between the client and the firm.

# data[].attributes.body
A CPA serving as an audit client's business consultant, performing such services as advising and directing the client in the accounting treatment uses for complex accounting,(apart from its audit of the client's financial statements) could be seen to pose the following threat to independence:

Self-review threat: if the CPA is directing the client as to the preparation of source documents used to generate finanacial statements, the CPA could have a selfish interest in its direction, or be influenced by the selfish interests of the client. In either case, compromising its objectivity.

Safeguards to prevent this kind of threat could include:
Policies and procedures of the client that emphasize the client's commitment to fair finanacial reporting.
A corporate govenance structure to provide oversight and communications regarding a CPA's services

# data[].attributes.body
9. According to SEC the audit cannot function in management role, audit cannot audit her own work and    audit cannot serve in advocacy role for his client. (Page 222) Auditors should follow the fundamental principles such as Integrity, objectivity, professional competence, confidentiality and professional behavior. Auditor should avoid any circumstance that cause possible impairments of independence and threats.

The threats are self-review threats, advocacy treats, financial self-interest threat and management participation threats.

Yes safe guard can be employed to reduce the threat. Safeguard created by the profession, legislation or regulation, safeguards implemented by the client and safeguards implemented by the firm. (Page 217)

Audit should avoid involving in a loan transaction with client & ownership of stock because it creates a financial self- interest treat, if a family members hold a key position with a client that can influence the perception of the CPA in decision making,

�˖gп�

# data[].attributes.body
B) Advising and directing the client in the accounting treatment that the client employed for numerous complex accounting, apart from its audit of the client’s financial statements.

Management Participation Threat:  This threat occurs when a CPA assumes management responsibilities or exercises authority over an attest client’s business affairs or operations.

Safeguard:  The client hires personnel with the appropriate qualifications to make managerial decisions or consults with a third party who has no affiliation with the CPA.

# data[].attributes.body
A) independence will mostly face the Advocacy Threat. Therefore, professional resource and continuing education will be their safeguard as their implement to the client. Inform the client so that they aware treatment is exist, by providing them with hotlines.

# data[].attributes.body
Advising that a treat, could be when one CPA person handles all the services, bookkeeping, tax preparation and then audits. This would compromise the company they are working for and for the firm they are doing the actual work for. There wouldn’t be checks and balancing’s and verify their sources.

Recommend that keeping the CPA service by using their employee’s that specialize in each department, would be in everyone’s best interest to keep the departments contained. One to do bookkeeping, tax preparation, then audits will continue to keep their objectivity while their independence.

# data[].attributes.body
C) This is a management participation threat, and can be safeguarded by the client by hiring management that can make their own competent decisions. This threat can be safeguarded by the CPA by becoming educated in the rules and regulations regarding independence from an audit client. This will give them the knowledge to refuse future requests to make management decisions for audit clients.

# data[].attributes.body
Advising on how to structure its business transactions to obtain specific accounting treatment under GAAP

This is a Management Participation Threat.  The CPA should not take on the role of client management or perform management functions on behalf of an attest client (p216).

A safeguard against this threat would be among safeguards implemented by the firm that clearly explain what defines both audit duties and management duties, and what to do when these duties conflict.  A specific safeguard in this case would be to decline to provide the advice on how to structure the business transactions, and refer the client to someone who doesn’t have a conflict of interest.

# data[].attributes.body
B) The threat to independence is the Self-Review Threat. The firm would advise complex accounting processes that could be open to scrutiny then they might not audit independently knowing they were responsible for said processes.

A safeguard would be the newspaper test. Making sure no accounting procedures were implemented that the CPA would have no hesitation being published. If the CPA wasn't certain whether they would have to defend their choice then maybe it's not the best choice.

# data[].attributes.body
C) Selecting the audit client's most senior accounting personnel by directly interviewing applicants for those positions.

If a CPA performed this service for a audit clients business it would go under a few different threats to independence. First example would be the Self-Interest threat. I believe this threat would happen because the CPA is in charge of auditing their client, but if they have such strong control over who the client hires in the accounting department it could mean they hire people they think would benefit their duty to audit the company. This is also connected to the Self-Review threat. It says in page five of the "Institute of Chartered Accountants in England & Wales",   "performing services for an audit client that directly affect the subject matter of the current, or a subsequent, audit engagement". I think hiring senior accountants would directly affect the audit being preformed. The third threat is from our book. It is the Management Participation Threat. This is when the CPA takes on the role of management for their client.

One safeguard the audit client can use is to have  competent employees to make managerial decisions. This means they can make all the interviews and hire the accounting employees so the CPA performing the audit service does not have to be involved. The audit firm can also preform a safeguard to help keep the independence. They should have a manager oversee the CPA performing the service to make sure they are not doing any activities that would be a threat to the independence. If the CPA does something wrong the firm should be able to replace them with another employee who is more independent.