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risk of losing
the client,
bad publicity
and the 
possibility that they will be found to have been negligent
, which will 
lead to further problems. This could lead to the firm being under pressure to produce an unqualified 
audit report when they have been qualified in the past, for example. 
Generally, assurance firms should seek to avoid such situations arising. If they do arise, factors to 
consider are: 

The materiality of the litigation 

The nature of the assurance engagement 

Whether the litigation relates to a prior assurance engagement 
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CHAPTER 19
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ETHICAL CONSIDERATIONS 
 
499 
The following safeguards could be considered. 

Disclosing to the audit committee the nature and extent of the litigation 

Removing specific affected individuals from the engagement team 

Involving an additional professional accountant on the team to review work
However, if the litigation is at all serious, it may be necessary to 
resign from the engagement
, as the 
threat to independence is so great. 
6.9.2 Second opinions 
Another way that auditors can suffer an intimidation threat is when the audit client is unhappy with a 
proposed audit opinion, and seeks a 
second opinion
from a different firm of auditors. 
In such a circumstance, the second audit firm will not be able to give a formal audit opinion on the 
financial statements – only an appointed auditor can do that. However, the problem is that if a different 
firm of auditors indicates to someone else's client that a different opinion might be acceptable, the 
appointed auditors may feel under pressure to change their opinion. In effect, a self-interest threat 
arises, as the existing auditor may feel that they will lose next year's audit if they do not change this 
year's opinion.
There is nothing to stop a company director talking to a second firm of auditors about treatments of 
matters in the financial statements. However, the firm being asked for a second opinion should be very 
careful, because it is very possible that the opinion they form could be incorrect anyway if the director 
has not given them all the relevant information. For that reason, firms giving a second opinion should 
ensure that they 
seek permission
to communicate with the existing auditor and they are appraised of all 
the facts. If permission is not given, the second auditors should decline to comment on the audit 
opinion. 
Given that second opinions can cause independence issues for the existing auditors, audit firms should 
generally take great care if asked to provide one anyway.