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

An audit senior at Karlov & Co is asked to review a set of accounts that she helped prepare for the client earlier in the year. Which category of threat to compliance with the fundamental principles does this most directly create?

This creates a self-review threat. A self-review threat arises when a professional has to evaluate or rely on work that they or their firm previously performed, so they may not assess it objectively. Reviewing accounts she helped prepare is exactly that situation.

  1. ASelf-review threatCorrect
  2. BAdvocacy threat
  3. CIntimidation threat
  4. DFamiliarity threat

Explanation

A self-review threat arises when a professional must evaluate the results of a previous judgement or service that they or their firm performed. Reviewing accounts she helped prepare means she would be assessing her own work. Advocacy relates to promoting a client's position, intimidation to pressure, and familiarity to close relationships.

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