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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Code of Ethics for Professional Accountants

Kestrel & Partners audits Bramwell Ltd. The audit engagement partner's brother has just been appointed as the finance director of Bramwell, a role with significant influence over the financial statements. Which category of threat to compliance with the fundamental principles does this MOST directly create?

It creates a familiarity threat. Because of the close family relationship with a person able to influence the financial statements, the partner may become too sympathetic to the client's interests and accept its assertions too readily. No own-work review, promotion of the client or pressure is described.

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

Explanation

A close family relationship with a client director who can influence the financial statements creates a familiarity threat: the partner may be too sympathetic to the client's interests due to the close relationship. No self-review arises because the partner is not reviewing their own work, and no advocacy or intimidation is described.

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