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

An accountant is asked by a long-standing client to prepare its tax return. The client's fees make up a very large share of the accountant's firm's total income, and the accountant fears losing the client if he disagrees with its views. Which type of threat to compliance with the fundamental principles does this MOST clearly create?

It is a self-interest threat. The accountant's firm depends heavily on one client's fees, so the accountant has a financial reason to please the client, which may compromise objectivity and professional judgement. Familiarity and self-review threats arise from close relationships or checking one's own work, which is not described.

  1. ASelf-interest threatCorrect
  2. BFamiliarity threat
  3. CSelf-review threat

Explanation

Over-dependence on fees from one client creates a financial interest in keeping that client, which is a self-interest threat. Familiarity arises from a close relationship, and self-review arises from evaluating one's own earlier work, and neither is the main issue here.

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