Which of the following situations best describes a familiarity threat?
A)design and implementation of a new payroll system
B)preparation and entry of bookkeeping transactions
C)completion of corporate transactions for subsidiary companies
D)PA has been working with this client for ten years,first as a manager,now as a partner

Question

Quizplus · Accepted Answer

Familiarity threat occurs when a long-term relationship between the auditor and the client creates a risk of undue reliance on the client's representations, which can impair the auditor's objectivity and professional skepticism. The fact that the PA has been working with the client for ten years suggests a familiarity threat.

Which of the Following Situations Best Describes a Familiarity Threat