AICPA Independence Standards: 5 Threats to Accountant Objectivity

1. Self-interest threat: This occurs when an accountant's financial or other personal interests could influence their judgment or behavior. For example, if an accountant has a financial interest in the client's business, it may compromise their objectivity and independence in providing unbiased advice or opinions.

2. Self-review threat: This threat arises when an accountant has to evaluate or review their own work, which can impair their objectivity and professional skepticism. For instance, if an accountant performs an audit and then subsequently provides advisory services based on their own audit findings, there is a risk of a self-review threat.

3. Advocacy threat: This threat occurs when an accountant promotes or advocates for their client's position or interests to the point where their objectivity and independence are compromised. For example, if an accountant aggressively defends a client's accounting treatment choices without considering alternative views, their independence may be compromised.

4. Familiarity threat: This threat arises when a close or longstanding relationship between an accountant and a client could influence their objectivity and professional skepticism. For instance, if an accountant has a personal or professional relationship with a client's management, it may create a familiarity threat that impairs their independence.

5. Intimidation threat: This threat occurs when an accountant is deterred from acting objectively due to actual or perceived threats from the client, such as coercion, manipulation, or undue influence. For example, if a client threatens to terminate an accountant's engagement unless they provide a favorable opinion, it can create an intimidation threat to independence.

It is important for accountants to identify and evaluate these threats to independence and take appropriate safeguards to mitigate them effectively. This helps ensure that the accountant can provide unbiased and objective services to their clients.