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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional and ethical developments

Harbor & Lane, a firm of auditors, audits Zenith Ltd. The audit engagement partner has just learned that her brother has been appointed as Zenith's finance director. Under the IESBA Code's conceptual framework, which category of threat does this situation primarily create?

It is a familiarity threat. The partner's brother is now finance director of the audit client, so the partner may become too sympathetic to, or accepting of, his work because of the close personal relationship, which could weaken her professional skepticism and objectivity.

  1. ASelf-review threat
  2. BFamiliarity threatCorrect
  3. CAdvocacy threat
  4. DIntimidation threat

Explanation

A close family member holding a senior financial position at the client means the partner may be too sympathetic to, or trusting of, that person's work. The IESBA Code classes this as a familiarity threat. A self-review threat arises when the firm evaluates its own earlier work, which is not the case here.

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