Threat means, a person or thing likely to cause damage or danger.

Advocacy threat

Advocacy is from the root word "advocate"- a person who publicly supports or recommends a
particular cause or policy.

This can occur when the auditor is asked to promote or represent their client in some way. In this
situation the auditor would have to be biased in favour of the client and therefore cannot be objective
and it is one of the fundamental principles of a professional accountant to be objective. We already
defined Objectivity which is to be fair, intellectually honest, and free from conflicts of interest. This
could happen if the client asked the auditor to promote their shares for a stock exchange listing or if the
client asked the auditor to represent them in court.

litigation- the process of taking legal action.

EXAMPLE: Duchess Company which you are auditing had filed in a legal case against one of their
customer, Ruby Company for recovery of debt and you go to the court arguing in favour of or being a
witness for your client, Duchess co. by providing evidence, then this is advocacy.

Familiarity threat

sympathetic- feeling concerned, expressing sympathy (understanding, feelings of pity)

This occurs when the auditor is too sympathetic or trusting of the client because of a close relationship
with them. This may be because a close friend or relative of the auditor works in a key role for the client.
The auditor may trust their friend or relative to not make mistakes and therefore not review their work
as thoroughly as they should and as a result allow material errors to go undetected in the financial
statements. This can also arise after a long association with a client or even acceptance of gifts or
preferential treatment, unless the value is clearly insignificant, from a client, its directors, officers or
employees.

Intimidation threat

From the root word "intimidate"- frighten or overawe (someone), especially in order to make them do
what one wants.

Intimidation is like a forceful act implied on the auditors whereas advocacy is done by the auditors for
personal benefits.
Clients may try to harass or bully auditors into giving preferential audit reports. They may use the fee as
leverage(influence or power used to achieve a desired result). The auditor should not give in to such
pressure and, in the circumstances, may choose to resign from such a client.

example: If you are the auditor of ABC Company, and while auditing you found out that the application
of the IAS standards are not complied with, which, if rectified would affect the going concern of the
business, and even after you recommend for the changes, the client threatens you of reducing your fees
or removing you from the assignment, and continue the audit the way it is to provide them with a
favourable opinion on their financial position. It is intimidation or threatening.