What is the self-review threat and why does it apply to us?

A self-review threat arises when a firm has to evaluate its own earlier work. If the firm that built your emissions inventory then gives an assurance conclusion on it, it is checking itself. APES 110 treats that as a threat safeguards generally cannot fix for a public interest entity.

Can our auditor prepare our climate report?

Usually not, and it turns on whether they will also assure it. Preparing a disclosure you later assure is a self-review threat under APES 110, and for a public interest entity that threat cannot be reduced to an acceptable level, so the service is prohibited. Other entities need a case-by-case assessment.

Our auditor said they cannot do this. Who should we use instead?

Because your auditor cannot prepare a disclosure they will later assure, the work goes to someone independent of them. Your realistic options are another audit firm outside your auditor's network, a specialist disclosure preparer, or an in-house build. Independence from your assurance provider is the binding constraint, not size or brand.

Glossary›Assurance, audit evidence and working papers›Self-review threat

Glossary term

Cluster A · A9

Tier 1 · differentiator

Self-review threat

Definition

A self-review threat arises when a firm has to evaluate its own prior work. If the firm that assures your climate disclosures also built your emissions model or drafted your disclosures, it is reviewing itself. Under APES 110 this threat cannot be reduced to an acceptable level for a public interest entity, so the service is prohibited.

APES 110

· self-review threat provisions in the non-assurance services section ·

In force

On this page

In practice
What the assurer does with it
Commonly confused with
Sources
Related terms
Related questions

Cluster

A · Assurance, audit evidence and working papers, 47 terms

In practice

The self-review threat is the specific mechanism behind the preparer and assurer split, and it is worth understanding precisely, because the boundary is not where most people assume.

The threat is created by the firm doing work that will later form part of the subject matter it assures. Building your emissions calculation model creates it. Selecting your emission factors creates it. Drafting the disclosure text creates it. Making the boundary determination creates it. What does not create it is advice, training, methodology explanation and answering technical questions, provided management makes the decisions and owns the output.

For a public interest entity, APES 110 does not permit the firm to apply safeguards and proceed. The prohibition on providing a non-assurance service that might create a self-review threat is absolute.

APES 110’s public interest entity definition was expanded for sustainability engagements, and whether a given captured entity meets it decides how strictly the independence provisions bite. Confirm the entity’s PIE status with the practitioner before assuming either way; the answer changes what the audit firm may and may not do for you.

What the assurer does with it

At engagement acceptance the firm maps every service provided to the entity by the firm and its network against the prohibition. Where it finds a problem, the options are that the firm withdraws the non-assurance service, the entity appoints a different assurer, or the preparation is done by an independent party. That is the conversation that produces the referral.

Commonly confused with

Self-interest threat, which is about financial dependence on the client, and familiarity threat, which is about long association. All three are named in APES 110; only self-review is engaged by preparation work.