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ACCA Applied Knowledge · Business and Technology · Fundamental principles of ethical behaviour

An accountant has acted as the financial controller's close friend for fifteen years and is now assigned as the external reviewer of the controller's department. He finds he is reluctant to challenge the controller's estimates. Which threat is MOST clearly present?

The most clearly present threat is familiarity. A long and close friendship with the controller makes the accountant too sympathetic to, or accepting of, the controller's work, so he hesitates to challenge the estimates. Nothing in the scenario points to a financial interest or self-review.

  1. ASelf-interest threat
  2. BFamiliarity threatCorrect
  3. CAdvocacy threat
  4. DSelf-review threat

Explanation

A familiarity threat arises when a long or close relationship makes a professional too sympathetic to another person's interests or too accepting of their work. His reluctance to challenge the friend's estimates shows this. No financial interest is described, so self-interest is not the best fit.

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