When Advocacy threats may arise?

Advocacy threats occur when members promote a position or opinion on behalf of a client to the point that subsequent objectivity may be compromised. Although it is natural for members to support their client’s or employer’s position this could mean that they adopt a position so closely aligned with that of their client or their employer that there is an actual or perceived threat to the fundamental principle of objectivity.
 

Circumstances which may give rise to advocacy threats for members include:

1. commenting publicly on future events
2. situations where information is incomplete or where the argument being supported is against the law
3. promoting shares in a listed company which is also an audit client
4. acting as an advocate for an assurance client in litigation or dispute with third parties.

For example a client entity may ask its audit firm to represent it in a legal dispute with the tax authorities about the amount of tax payable. The audit firm should refuse to act in this way, because by acting as advocate for the client in this way, its objectivity would come under threat.