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

Under the IESBA Code's conceptual framework, a professional accountant identifies a threat to compliance with the fundamental principles. What should the accountant do next if the threat is not at an acceptable level?

When a threat is not at an acceptable level, the accountant must address it by eliminating the circumstances creating it, applying safeguards that reduce it to an acceptable level, or declining or ending the engagement. Documenting it or obtaining client consent does not resolve the threat.

  1. AAddress the threat by eliminating the circumstances, applying safeguards or declining or ending the engagementCorrect
  2. BContinue the engagement but document the threat in the working papers
  3. CObtain the client's written consent to proceed despite the threat
  4. DWait until the year end and report the matter to those charged with governance

Explanation

The framework requires the accountant to identify, evaluate and address threats. If a threat is not at an acceptable level, it must be addressed by eliminating the circumstances, applying safeguards where they can reduce it to an acceptable level, or declining or ending the engagement. Documentation or client consent alone does not reduce the threat.

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