Which of the following statements regarding legal services to audit clients is incorrect?

The correct answer highlights that legal services for non-material matters may indeed create a self-review threat, which is a risk where auditors are put in a position to review their own work or the work of others who are closely aligned with them. This concept is significant in auditing since it can undermine the objectivity and independence of the auditor.

When auditors provide legal services for non-material matters, they may become biased in their evaluations or interpretations, particularly when it comes to matters that are closely related to the audit. This inconsistency can result in a lack of impartiality when auditing financial statements or providing other audit-related services. The potential threat arises because the auditors may struggle to remain objective if they are analyzing or evaluating their own legal advice in the context of the audit.

Understanding this dynamic is essential for auditors to maintain their independence and objectivity, which are critical components of the auditing process. The other options focus on different dimensions of threats in the audit context, but the statement regarding non-material matters encapsulates the fundamental issue of self-review in the context of auditing and legal services.