Which statement below exemplifies the principle of a familiarity threat?
Understand the Problem
The question is asking for an example that illustrates the principle of a familiarity threat, specifically within the context of auditing and CPA ethics.
Answer
The CPA auditing Gower Pharmaceuticals learns his brother has just been hired as CFO of the company.
The CPA auditing Gower Pharmaceuticals learns his brother has just been hired as CFO of the company.
Answer for screen readers
The CPA auditing Gower Pharmaceuticals learns his brother has just been hired as CFO of the company.
More Information
A familiarity threat arises when a personal relationship, such as a familial connection, might impair an auditor's objectivity, because the auditor may become too sympathetic to the interests of others due to becoming too familiar with them.
Tips
Be careful not to confuse familiarity threats with self-interest threats, which involve financial or other personal interests.
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