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ACCA Applied Knowledge · Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession

An accountant in business owns shares in a supplier that her employer is about to select for a large contract, and she sits on the selection panel. Which category of threat does this situation primarily represent, and what is the most appropriate response?

This is a self-interest threat, because her shareholding gives her a financial interest in the outcome. The appropriate response is to disclose the interest and withdraw from the selection decision. It is not intimidation or familiarity, and reporting the supplier or permanent rotation would be unwarranted.

  1. AIntimidation threat; report the supplier to the regulator
  2. BSelf-interest threat; disclose the shareholding and withdraw from the selection decisionCorrect
  3. CFamiliarity threat; rotate her to a different department permanently

Explanation

A financial interest in the supplier creates a self-interest threat to objectivity. The appropriate response is to disclose the interest to the employer and remove herself from the decision. Intimidation and familiarity relate to pressure and close relationships, which are not present, and permanent rotation is disproportionate.

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