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ACCA Applied Knowledge · Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession

Under the IESBA Code's conceptual framework approach, what is a professional accountant required to do when a threat to compliance with the fundamental principles is identified?

The accountant must evaluate the threat and, if it is not at an acceptable level, deal with it by eliminating it or applying safeguards. Resignation is a last resort only when the threat cannot be dealt with, so it is not required in every case.

  1. AResign from the engagement immediately in every case
  2. BEvaluate the threat and, where it is not at an acceptable level, address it by eliminating it or applying safeguardsCorrect
  3. CReport the threat to the police before any other action
  4. DIgnore it if no client has complained about it

Explanation

The conceptual framework requires the accountant to identify threats, evaluate them, and address those not at an acceptable level by eliminating them, applying safeguards, or declining or ending the engagement. Immediate resignation is not always required, because many threats can be reduced to an acceptable level.

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