A familiarity threat at an audit engagement occurs when
A)the member has a financial interest in the client.
B)it is difficult to behave with professional skepticism.
C)PA promotes the client's position to third parties.
D)the member discloses financial information about the client.

Question

Quizplus · Accepted Answer

A familiarity threat occurs when an auditor's long association with a client or perception of closeness to a client could lead to a loss of objectivity, compromising their ability to critically evaluate evidence. In such situations, it becomes difficult for an auditor to behave with professional skepticism. The other options mentioned - A, C, and D - are examples of other types of threats in the audit engagement but not related to familiarity threat.

A Familiarity Threat at an Audit Engagement Occurs When