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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Advertising, tendering, and obtaining professional work and fees

Harlow & Co, an audit firm, is preparing a proposal to tender for the audit of Vantage Ltd. The firm's marketing partner suggests stating in the tender document that Harlow & Co is 'far superior to all other firms in the region'. Under the IESBA Code, how should the firm approach this statement?

The statement should be omitted. The IESBA Code requires accountants to be honest and truthful when promoting services and prohibits unsubstantiated claims and comparisons with other firms. A belief that the firm is superior does not substantiate the claim, whereas factual, verifiable statements about quality are allowed.

  1. AInclude it, as comparative claims are acceptable if the firm believes them to be true
  2. BOmit it, because the Code requires marketing to be honest and truthful and not to make disparaging or unsubstantiated comparisons with other firmsCorrect
  3. CInclude it only if the client's audit committee has approved the wording
  4. DOmit it, because tender documents may never contain any statement about the firm's quality

Explanation

The IESBA Code requires that a professional accountant promoting services must not bring the profession into disrepute and must be honest and truthful. Unsubstantiated claims and comparisons with other firms are not permitted. Option A is wrong because belief does not make a claim substantiated. Option D is wrong because factual statements about quality are allowed.

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