The dynamic environment in which business operate today has posed many situation because of which compliance with fundamental principles may be potentially threatened.
Such threats are classified as follows:-
1) Self Interest threats – which may occur as the result of the financial or other interest of a finance and accounting professional or of an immediate or close family members.
2) Self review threats – which may occur when a previous judgement needs to be revaluated by the finance and accounting professional responsible for that judgement.
3) Advocacy threats – Advocacy is the act of arguing on behalf of a particular issue, idea or person. These threats occur when professional promotes a position or opinion to the point that subsequent objectivity may be compromised.
4) Familiarity threats – occur when professionals has close relationship in the work environment & such relationship impair his selfless attitude towards work.
5) Intimidation threats – occur when a professional may be prohibited from acting objectively by threats, actual or perceived.