Self-interest threats may occur as a result of the financial or other interests of members or their immediate or close family members. An immediate family member is defined by the Code as a spouse (or equivalent) or dependant. A close family member is a parent, non‐dependent child, brother or sister, who is not an immediate family member.
Such financial interests might cause members to be reluctant to take actions that would be against the interests of the client. For example, if a member holds shares in a client company, he may be unwilling to give an unfavourable audit report. This would threaten the fundamental principle of objectivity.
Such financial interests might cause members to be reluctant to take actions that would be against the interests of the client. For example, if a member holds shares in a client company, he may be unwilling to give an unfavourable audit report. This would threaten the fundamental principle of objectivity.
Circumstances which may give rise to self‐interest threats for members include:
- financial interests, loans or guarantees
- incentive-based fee arrangements
- concern over employment security
- commercial pressure from outside the employing organisation
- inappropriate personal use of corporate assets
- close personal or business relationships
- holding a financial interest in a client or jointly holding a financial interest with a client
- undue dependence on fees from a client.