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

Kestrel & Co, a firm of professional accountants, is offered a case of wine worth a modest amount by Alder Ltd, an audit client, as a seasonal thank-you. The engagement partner believes the value is clearly insignificant and the gift is not intended to influence judgement. Under the IESBA Code, what is the appropriate response?

The firm may accept the wine because the IESBA Code permits gifts and hospitality whose value is clearly insignificant and which are not intended to influence behaviour. There is no blanket ban, and no requirement to disclose such a trivial gift in the auditor's report.

  1. AThe firm may accept the gift because its value is clearly insignificant and its intent is not to influence behaviourCorrect
  2. BThe firm must refuse every gift from an audit client regardless of value
  3. CThe firm may accept only if the gift is shared with the client's audit committee
  4. DThe firm may accept only if the gift is disclosed in the auditor's report

Explanation

The IESBA Code allows acceptance of gifts and hospitality where the value is clearly insignificant and the intent is not to influence behaviour. A blanket prohibition is not required. Disclosure in the auditor's report or sharing with the audit committee is not a Code requirement for such trivial items.

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