... auditor to reduce valuable audit work and therefore compromise audit quality. This article, based on a questionnaire survey of UK finance directors, investigates three aspects of the auditor/director relationship where the ‘Familiarity Threat’ may be present. Further examples of existing threats are identified and additional threats emerge, in particular an urgency threat, and a loss of face threat. Other important examples are found of familiarity threats and self-review threats. These include procedures firms can perform to protect auditor independence, such as review by a second partner, consultation with designated professionals in the firm or disclosure to the audit committee. Safeguards in the work environment. 5.3 Forms of Threats to Auditor Independence The FEE (1998) and the ISB (2000) (now defunct) identified five categories of threats - self-interest threat, self-review threat, advocacy threat, familiarity threat, and intimidation threat. Familiarity threats occur when auditor develops a cordial relationship with the client; Intimidation threat occurs due to actual or perceived threats from clients or other stakeholders. However the IESBA Code states that it is not possible to rely solely on such safeguards to reduce threats to an acceptable level. Jörgen Holmquist . In other words, safeguards should be applied, when necessary, Employment by the client of former audit partners and staff. The study concludes that non audit services could be extended in Masvingo, with exception of nonaudit services with proven risk to auditor independence. ... A familiarity threat arises from knowing someone very well, possibly through a long association in business. Threat of Complacency, Familiarity, Self-Review and Social Bonding When the auditor becomes too trusting or sympathetic of the client due to a close relationship with the management and employees, then social bonding and familiarity threat is likely to creep in. •Threats due to auditing own work (i.e. 5. Here the auditor can't act independently as she is scared due to intimidatory threats such as the threat to take away the work unless they do as the client wishes. Page 2 • Code recognises that long- standing audit relationships can create threats to, and undermine confidence in, the independence of the auditor • Recent initiatives propose stronger safeguards: – EC Green Paper – PCAOB concept release threat, and a loss of face threat. ... safeguards must be put in place to eliminate the threat and these safeguards must be documented in the audit report. Familiarity . 5.3 Forms of Threats to Auditor Independence Threats to independence have evolved over time. Management motivation is found to be a key driver of pressure on an auditor. In other words, safeguards should be applied, when necessary, to eliminate the threats or reduce them to an acceptable level. Neither auditors nor our system of regulating their function has ever received the degree of public scrutiny and skepticism as that which followed the violent collapse of Enron, and the sorry parade of Auditor Independence Safeguards • Safeguards that may eliminate or reduce such threats to an acceptable level fall into two broad categories: 1. auditor complies with paragraph R600.8 of the proposal, any threats of the auditor assuming a management responsibility would be reduced to an acceptable level. 5.3 Forms of Threats to Auditor Independence Threats to independence have evolved over time. — Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director. Threats can be real or perceived. 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