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ACCA Applied Knowledge · Business and Technology · Ethical conflicts and dilemmas

An accountant in business is asked by her employer to present the company's case to a lender using optimistic assumptions she regards as promoting the company's position beyond what the evidence supports. Which statement is most accurate?

An advocacy threat exists. Promoting the employer's position with assumptions the evidence does not support risks compromising her objectivity and integrity, even though she is acting in her employer's interest, so safeguards or refusal are needed.

  1. AThere is no threat because she is acting within her employer's interests
  2. BOnly a self-review threat arises, because she prepared the figures
  3. CThere is an advocacy threat, as promoting the employer's position may compromise objectivityCorrect
  4. DThere is a familiarity threat, because she knows the lender personally

Explanation

Advocacy threats arise when a professional promotes a position to the point that objectivity is compromised. Acting for the employer does not remove the threat. Nothing indicates a personal relationship with the lender, and self-review is not the main issue.

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