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CSS Audit Tax Finance P-II QUESTION #1217
Question 1
An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to independence. The threat would be a:
  • Self-interest threat✔️
  • Self-review threat
  • Advocacy threat
  • Familiarity threat
Correct Answer Explanation
Accepting a loan on favorable terms from an audit client creates a self-interest threat — the auditor gains a personal financial benefit from the client relationship, which could consciously or subconsciously influence their judgment. The auditor's financial interests become aligned with the client's, compromising independence.