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

An accountant is aware that a client's management are pressuring the accountant to ignore an unusual transaction. Which response best reflects both professional scepticism and the principle of integrity?

The best response is to gather sufficient appropriate evidence about the transaction and refuse to be associated with information known to be misleading. This applies scepticism by not relying on management's word, and integrity by staying honest despite pressure. Going to the press would breach confidentiality.

  1. AObtain sufficient appropriate evidence about the transaction and refuse to be associated with information known to be misleadingCorrect
  2. BAccept management's explanation because they know the business best
  3. CIgnore the transaction if the amount is below last year's profit
  4. DDisclose the transaction to the press immediately

Explanation

Integrity means being straightforward and honest, and not being associated with misleading information. Scepticism means seeking corroborating evidence rather than relying on management's assertions. Accepting explanations unchallenged fails scepticism, and going to the press would breach confidentiality without following proper channels.

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