Auditing & Assurance › Ethics & Independence
How do intimidation threats arise and how are they addressed?
AdvancedAnswer
Intimidation threats arise when the auditor is deterred from acting objectively by actual or perceived pressures—threats of dismissal, litigation, dominant management personalities, or fee pressure. Safeguards include strong governance/audit committee support, consultation, documentation, escalation within the firm, and, if the pressure prevents proper judgment, resignation. The auditor must not yield to pressure that compromises the opinion.
Real-world example When management threatens to switch firms unless a misstatement is ignored, the auditor escalates and stands firm on the required adjustment.